California says Uber and Lyft are counting their Prop 22 chickens before they hatch
Thursday, December 3, 2020

California says Uber and Lyft are counting their Prop 22 chickens before they hatch

By Payroll and Entitlements Editorial Staff

The State of California told a state appeals court that Uber and Lyft are counting their chickens before they hatch. Now that Proposition 22 and its carve-out for app-drivers has been approved by voters, the rideshare companies have sought rehearing on the court’s earlier decision affirming a lower court’s preliminary injunction enjoining them from classifying app-drivers as "independent contractors." Uber and Lyft want the injunction vacated.

It’s all about A.B. 5. California, through its Attorney General Xavier Becerra (and joined by city attorneys), sued the rideshare companies to bar them from continuing to misclassify drivers after the controversial A.B. 5 was codified and went into effect, with its presumption that workers are "employees" unless the "ABC test" is met—a test that Uber and Lyft were unable to meet.

Then comes Prop 22. But Proposition 22 would amend the law to provide a carve-out for app-drivers when certain conditions are met. As Uber alleged in its petition for rehearing, under the new law, ‘"an app-based driver is an independent contractor and not an employee or agent with respect to the app-based driver’s relationship with a network company" if four conditions are met,’" all of which the rideshare company says it meets.

Not so fast. In its answer to the rideshare companies’ request, California asserts that the passage of Proposition 22 has not yet been certified, nor will it take effect before the appeals court’s opinion becomes final. Further, whether Uber and Lyft meet the requirements of the new law requires a factual analysis that neither the appeals court nor the trial court below has performed—or could perform based on the existing record.

Rehearing is neither necessary nor appropriate, according to California and the city attorneys.

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