Labor & Employment Law Daily California governor approves A.B. 5 gig-worker law carve-outs
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Monday, September 14, 2020

California governor approves A.B. 5 gig-worker law carve-outs

By Pamela Wolf, J.D.

Uber and Lyft have also filed CEO declarations in a state appeals court, presumably to ensure that if an injunction is upheld and a ballot initiative on the controversial gig-worker law known as A.B. 5 fails, they have compliance plans in place.

On September 4, California Governor Gavin Newsom signed into law A.B. 2257, which amends the state’s controversial gig-worker provisions of the public law formerly known as A.B. 5. As an urgency statute, A.B. 2257 took effect upon enactment.

More carve-outs. Assembly Bill 2257 recasts and clarifies the business-to-business, referral agency, and professional services exemptions to the three-part ABC test for employment status that was codified under A.B. 5, and also exempts additional occupations and business relationships from the test (see Controversial gig worker protection bill amended to revamp exemptions, September 2, 2020).

Under A.B. 5, there is a presumption that workers are “employees” as opposed to “independent contractors” unless the employer can prove that the worker meets the three-part ABC test.

Lyft and Uber. The new law was not received well by rideshare companies Lyft and Uber, who pushed a ballot initiative for this November (Proposition 22) to carve out exemptions that would apply to them.

Further, California Attorney General Xavier Becerra filed a lawsuit in state court against Lyft and Uber for misclassifying their drivers and to force them to comply with the new law’s requirements. The court granted a preliminary injunction barring the rideshare companies from treating drivers as “independent contractors.” Afterwards, the rideshare companies separately made comments implying that they might temporarily shut down services in California.

In cases consolidated on appeal, Lyft and Uber were able to get a stay of the injunction, providing certain conditions are met. One of those conditions was that by September 4, the rideshare companies had to each submit sworn statements from their CEOs confirming that they have “developed implementation plans under which, if this court affirms the preliminary injunction and Proposition 22 on the November 2020 ballot fails to pass, the compan[ies] will be prepared to comply with the preliminary injunction within no more than 30 days after issuance of the remittitur in the appeal.”

On September 4, the rideshare companies’ CEOs each filed statements.

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