Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) 23 E. California Voters Adopt Proposition 22 The California Attorney General, in People v. Uber Technologies, Inc.,123 sued ride-share companies for a preliminary injunction against the classification of drivers as independent contractors. The trial court granted the requested relief, finding the State had shown a reasonable probability—indeed, “an overwhelming likelihood”—of prevailing on the merits of the claim that the ride-share companies were misclassifying drivers as independent contractors in violation of AB 5.124 In 2020, the Court of Appeal affirmed, holding that the trial court did not abuse its discretion in granting the preliminary injunction. The trial court had focused on the companies’ inability to meet Prong B of the ABC test: whether their drivers perform work outside the usual course of defendants’ businesses.125 The trial court found that despite attempts to characterize the drivers as the ride-share companies’ “customers,” for whom the ride-share companies provide the service of matching drivers with passengers, the State’s eventual success on the merits was almost “inevitable.”126 The trial court acted within its discretion in concluding that rectifying the various forms of irreparable harm shown by the State would more strongly serve the public interest than protecting the ride-share companies, their shareholders, and all those who had come to rely on the advantages of online ride-sharing delivered by a business model that does not provide employment benefits to drivers.127 But then the California voters spoke. In November 2020, California voters overwhelmingly passed Proposition 22, the Protect App-Based Drivers and Services Act.128 Proposition 22 classifies certain app-based ridesharing and delivery drivers as independent contractors, provided they (i) maintain control over their schedules, (ii) need not accept a particular “gig,” and (iii) are not restricted from performing services for multiple companies (except during their engaged time). Proposition 22 also entitles app-based drivers to certain benefits, such as a minimum compensation, time-and-ahalf for overtime, paid sick time, unemployment insurance, bargaining rights, per-mile compensation, and a health care subsidy (for drivers who average 15 hours per week of engaged time in a calendar quarter). Proposition 22 likely will moot some, if not all, of the ongoing litigation attacking the classification of app-based drivers. Nevertheless, there remain a number of pending independent contractor misclassification cases where drivers’ employee status continues to be litigated under the ABC test for the time period pre-dating the enactment of Proposition 22.129 123 56 Cal. App. 5th 266 (2020). 124 Id. at 281. 125 Id. at 319. 126 Id. at 301. 127 Id. at 328. 128 Bus. & Prof. Code §§ 7448 et seq. 129 In Lawson v. Grubhub, Inc., the Ninth Circuit “conclude[d] without difficulty that Proposition 22 does not apply retroactively.” 13 F.4th 908, 914 (9th Cir. 2021). The court reasoned that “California has a settled presumption against interpreting statutes—including ballot propositions—as having retroactive application.” Id.
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