By Gregory Grinberg
Thursday, February 4, 2021 | 223 | 1 | min read
On November 3rd last year, Americans voted coast to coast. In California we voted not only on federal issues, but also on local ones. Any close election usually comes with some disappointments and this election day was no exception.
Gregory Grinberg
Proposal 22, passed by a majority of California’s electorate in November, would exempt certain “gig” or “app-based” workers from the effects of Bill 5. With AB 5, lawmakers attempted to turn Uber and Lyft drivers over, among a slew of other workers and professionals trapped in its flawed dragnet intruded on employees.
Even if the driver wants to be an independent contractor. Even if Uber and Lyft only offer independent contract agreements. AB 5 would have overridden the wishes of the parties and forced an employment relationship, and Proposition 22 repealed this provision.
Hypothetically, AB 5, which went into effect Jan. 1, 2020, changed your average Uber driver from an independent contractor to an employee, and Proposition 22 changed that Uber driver back. An Uber driver who was “boned” by a truck on January 15, 2021, likely would have filed an employee compensation claim against Uber. The company rejected the claim on the grounds that the driver was not an employee but an independent contractor and would have been correct on the basis of Proposal 22.
Well, not everyone was happy with Proposition 22. Anyone wanting to hurt Uber or Lyft, or any driver who doesn’t want to be an independent contractor, can join the lawsuit to overturn Proposition 22. If the lawsuit is successful and the California Supreme Court denies Proposition 22, AB 5 would likely control the independent contractors and get them back into employees.
In the meantime, all pending claims should monitor this development closely. Uber and Lyft are likely to want to go to a priority conference ASAP, arguing that the law currently is that Uber and Lyft drivers are independent contractors and the claims should be dismissed. To protect against pending legal remedies, you may be inclined to compromise and release such claims with a Thomas Result to resolve.
In the meantime, the applicants’ lawyers will urge their clients to postpone the proceedings for as long as possible and seek to extend the appeals in the hopes that the law will be rolled up to revive their claims. The pressure will of course be on applicants to get some money now instead of waiting and possibly getting nothing.
Meanwhile, Uber and Lyft have the ultimate trump card: They have already voted with their money. They have already voted with their votes. And they have already voted with their votes. The next step, if the Supreme Court gives Uber and Lyft a reversal, is to vote with your feet and cease operations in California.
The two companies offer a service that is incredibly socially popular and extremely beneficial. There’s no shortage of volunteers willing to drive for either or both. In general, instances of DUIs drop dramatically wherever the two go into operation. And, contrary to the money and effort it takes to get a taxi medallion, there aren’t really many barriers to entry. Almost anyone with a clean and safe car can drive for both of them.
Uber previously threatened to leave California if it is forced to switch from independent contractors to employee drivers.
The reason I’m bringing this to your attention is because California law’s treatment of Uber and Lyft is a widely visible symptom of a chronic illness, aside from the immediate impact it has on workers’ compensation practices. How many other useful but not so visible businesses are being driven out of the state due to arduous regulations and labor laws?
Perhaps, prior to the draft law, all elected officials involved should be required to declare under penalty of perjury that they have reread a certain fable by Aesop in the past three months. Those behind the effort to overthrow Proposition 22 might also find some benefit from a history refresher.
Gregory Grinberg is the managing partner of Gale, Sutow & Associates’ SF Bay South office and a certified employee compensation law specialist. This post was reprinted with permission from Grinberg’s WCDefenseCA blog.
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