Labor & Employment Law Daily Gig employees’ constitutional claims tossed; California AB 5 remains intact
Thursday, September 24, 2020

Gig employees’ constitutional claims tossed; California AB 5 remains intact

By Wayne D. Garris Jr., J.D.

In one of several challenges to California’s employee classification law, a federal judge found AB 5 did not violate the federal or state constitutions.

Granting the State of California’s motion to dismiss, a federal district court in California held that California Assembly Bill 5, which regulates the classification of workers in the state, did not violate either the U.S. or state constitutions. In response to equal protection and due process challenges by Uber, Postmates, and two drivers for the companies, the court found that AB 5 and its exemptions are rationally related to the state’s legitimate interest in addressing misclassification of workers. Further, while the due process clause confers a right to individuals to pursue private employment, AB 5 does not restrain that right—it merely regulates legal classifications (Olson v. State of California, September 18, 2020, Gee, D.).

Equal protection. The plaintiffs, Uber, Postmates, and two drivers for the companies, filed suit alleging that AB 5, a law enacted by the California legislature to set standards for employee classification, violates the U.S. and California constitutions. They argued that AB 5 violates the equal protection clause because its exemptions improperly drew “classifications between network companies and nonnetwork companies,” and “between independent service providers and non-independent service providers that perform work similar in all relevant respects.” Further, they asserted that the exemptions granted to other industries was evidence of “irrational animus” against gig employers.

Legitimate interest. The court explained that it had to determine whether the statute rationally furthers a legitimate state interest. Here, the legislature asserted a legitimate interest in addressing misclassification of workers. The court also found that the non-exemption of gig workers also furthered the state’s rational interest. The plaintiffs took issue with the legislature’s assertion that AB 5 would benefit gig employees, but rational basis review did not permit the court to judge “the wisdom, fairness, or logic” of the legislature’s choices. The legislature put forth a plausible policy reason for not exempting gig employers—”rampant misclassification of gig economy workers.”

Rationally related. The plaintiffs argued that by exempting several industries from AB 5, the legislature undercut its rational basis for regulating misclassification. The court disagreed, finding that the plaintiffs only drew “superficial distinctions” between exempted and non-exempted groups. For example, the plaintiffs claimed that AB 5 exempts industries with some of the highest misclassification rates, but the statute, in fact, covers many of those workers, the court observed.

The plaintiffs also took issue with the statute’s exemptions based on the type of professional license a worker possessed. Again, the court disagreed. A license to operate a transportation business, as the plaintiffs in this case possessed, required different training than a license to practice law or medicine, for example. The plaintiffs failed to show that there was no rational reason for the legislature to treat them differently.

No animus. Lastly, the court found that the legislature was not motivated by animus towards gig employers or favoritism towards unions. Under rational basis review, where a statute classifies a “politically unpopular group [that] is not a traditionally suspect class, a court may strike down the challenged statute under the Equal Protection Clause ‘if the statute serves no legitimate governmental purpose and if impermissible animus toward an unpopular group prompted the statute’s enactment.’”

Here, the court found that AB 5 did not single out gig economy companies but addressed misclassification broadly. The plaintiffs put forth evidence, including a statement from an assemblywoman, that the legislature believed the gig economy presented a particularly urgent problem, but there was no evidence that gig companies were targeted or that the plaintiffs were a “politically unpopular group.” As to the assertions of lobbying, the court noted that the right to lobby is constitutionally protected and “accommodating one interest group is not equivalent to intentionally harming another.”

Due process. Turning to the due process claim, the plaintiffs asserted that enforcement would prevent workers from “pursuing their chosen occupation as business owners in the sharing economy.” The court acknowledged that there is a recognized liberty based on a right to choose one’s field of employment; however, the interest is not a fundamental right and AB 5 is not “a complete prohibition” on the workers’ right to pursue their chosen professions. But the court was not convinced that working as an independent contractor was “field of private employment.” Thus, the court found that the plaintiffs failed to show that AB 5 violated the federal or state due process clauses.

Contract clause. The court also rejected the assertion that AB 5 violated the contracts clause by invalidating contracts between the companies and their workers. In order to prove a contracts clause violation, the plaintiffs had to show that there is a contractual relationship, a change in law that impairs that contractual relationship, and that the impairment is substantial.

At issue here was whether the impairment was substantial. According to the court, the plaintiffs should have “foreseen that the labels the parties placed on their relationship were not dispositive and that Individual Plaintiffs could be reclassified as employees.” As early as 2015, courts have found that Uber drivers could be considered employees despite contractual language. Thus, the court found that it was foreseeable that the independent contractor status could be reclassified by the legislature or a court, so there was no substantial impairment.

Ninth Amendment. Lastly, the plaintiffs asserted that AB 5 violated the Ninth Amendment and the Inalienable Rights provision of the state constitution. The court quickly dismissed the Ninth Amendment claim noting that the Ninth Amendment does not secure any constitutional rights, thus there is not independent claim for a violation.

California Constitution. Nor did the plaintiffs state a claim under the state constitution. The “Baby Ninth” amendment of the state constitution did not provide a mechanism for its enforcement and the Inalienable Rights provision protects a right to privacy, but the plaintiffs’ claims did not implicate this right.

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