California Supreme Court: ABC Test for Performance Workers Retrospective, Battle for Uber, Lyft

The rigorous ABC test in California that makes it difficult to claim workers are independent contractors applies retroactively, the state Supreme Court ruled Thursday in a ruling that Uber, Lyft and other gig companies can sue in several lawsuits. impair.

The ABC test was issued in an April 2018 resolution called Dynamex, which said workers should be considered employees unless they (a) work free from control over the hiring staff; (b) work performed outside the ordinary court for the business of the rental business; and (c) have independent enterprises that do this type of work.

“Concerns about public policy and fairness, such as the protection of employees and the benefit of companies that meet wage order obligations, favor the application of Dynamex with retroactive effect,” a unanimous opinion was written by Chief Justice Tani Cantil-Sakauye. The ninth court of appeal in May 2019 said Dynamex should be retrospective.

The Dynamex decision is the basis of California’s controversial AB5 draft law, which codified the ABC test, while releasing numerous appeals and expanding the scope beyond payroll.

Uber, Lyft, DoorDash and other gig companies classify workers as independent contractors rather than employees, saying they rely on the flexibility of the model. By doing so, they also save millions of dollars in benefits, minimum wage, overtime and other expenses. The gig companies spent $ 220 million convincing voters to pass the November 22 proposal, which will keep their workers as independent contractors and release them from AB5 from its mid-December adoption. Trade union groups have called for a halt to the measure.

Plug. 22 does not protect the performance companies retroactively. They are facing a series of lawsuits over division of employment, from both government agencies and their own workers. The Supreme Court ruling means that if the gig companies lose these cases, they could face much greater fines because they could be held accountable for actions before Dynamex went into effect in April 2018.

In the largest one, California’s attorney general and three city attorneys sued Uber and Lyft in May. The labor commissioner in California sued the two industry activities in August, saying they had committed wage theft by misclassifying managers. Several drivers and couriers have joined forces in lawsuits against subdivision against Uber, Lyft and other gig companies.

“They’re not going to be lucky,” said Bob Eassa, a partner at Duane Morris, a law firm in San Francisco. “For each case still pending, the test applicable to them will be Dynamex and it will go back as far as the statute of limitations allows,” usually three or four years, depending on the applicable business code.

“Despite Uber and Lyft spending record sums to rewrite the law to benefit themselves, they cannot change the fact that they violated the law years ago before Prop. 22 by not classifying their managers as employees,” John said. Coté said. a spokesman for San Francisco City Attorney Dennis Herrera, who is one of the plaintiffs in the California Attorney General case against the company. “This decision strengthens the position we have held throughout.”

Uber and Lyft did not immediately respond to requests for comment. The California Attorney General’s office declined to comment.

Shannon Liss-Riordan, a Boston lawyer who has filed lawsuits for misconduct on behalf of gig workers and housekeepers, said the decision should help California workers correct redress for wage violations that occurred before April 2018. She has lawsuits and arbitration pending against Uber, Lyft, Grubhub. , DoorDash, Postmates, Instacart, Shipt and Amazon.

The court “stressed that this rigorous test is necessary because the earlier, looser standard … has led to inconsistent outcomes that do not adequately protect workers,” she said in an email. “This decision is a further accusation of Prop. 22.”

But MC Sungaila, chairman of the appeals practice at the law firm Buchalter, said the new decision could be detrimental to employers.

“In the wake of the pandemic, it raises concerns for small businesses that could be hit by backward wage and hourly law issues,” she said in a statement.

In addition to gig workers, the ABC test also affects other sectors, says Laura Padin, senior advocate at the National Employment Law Project in Washington.

“We see a lot (wrong classification) in industries where work is mostly done by people of color, such as housekeeping, home care and trucks,” she said. “Often these are low-wage industries where employees do not have much bargaining power.”

The court ruling will “make it much easier to hold companies that did this type of scheme accountable years ago,” she said.

In a case that also underpins Thursday’s decision, the housing company Jan-Pro hired workers from a large number of immigrants by requiring its caregivers to confirm that they have independent franchises. This was ‘even though Jan-Pro controlled most of the work and they did not run their own businesses’, she said. “Jan-Pro was able to evade workplace protection and offset the workers’ risks and expenses that are normally accepted by the employer.”