AB-5 Opposition Builds as COVID-19 Pandemic Exposes the Law’s Fissures

As we have explored over a series of articles, AB-5, California’s controversial “gig worker” law, faced plenty of opposition before the COVID-19 pandemic began. Since its passage, opponents including the California Trucking Association (“CTA”), Uber, and Postmates brought their fight to the courtroom, filing lawsuits and (with mixed results) seeking preliminary injunctive relief. Freelance writers, photographers and photojournalists, and music-industry workers (singers, composers, songwriters, and recording artists) saw success with a different approach: lobbying AB-5’s chief author, Assemblywoman Lorena Gonzalez, for exemptions to the law.

The impact of COVID-19 on California’s economy, including skyrocketing unemployment filings and budget cuts across state agencies, has only increased public opposition to the new law, as evidenced by a series of recent op-eds, many of them recommending outright repeal over piecemeal exemptions. According to one commentator, California’s two priorities for the COVID-19 pandemic should be keeping people safe and minimizing economic damage, “in that order.” AB-5, the commentator argues, is harmful on both counts because it: (1) makes it more difficult for people to stay at home under social distancing orders by finding remote, often freelance-type work; and (2) keeps willing workers out of an economy at a time when state unemployment might reach record levels.

In February 2020, California state Senator John Moorlach introduced Senate Bill 990, which would suspend AB-5’s enforcement through January 2022. In an op-ed, Senator Moorlach argued that stay-at-home orders imposed to curb the spread of COVID-19 left residents more reliant than ever on gig workers, especially independent truckers who bring key goods to consumers. Truckers, he argued, are “truly essential” because they form a key part of the business model for the few companies actually hiring during the pandemic. Without independent truckers, new employees hired by Walmart and Amazon would not have product with which to stock warehouse shelves or fill orders. According to Senator Moorlach, his bill would give residents “room to debate AB-5, while keeping the economy rolling.” He urged the Senate to take it up in the next session (set to convene May 11) and, on April 17, the bill was voted out of committee.

Meanwhile, the CTA’s anti-AB-5 federal lawsuit keeps trucking. In late January 2020, the state defendants and the International Brotherhood of Teamsters (who intervened) appealed District Judge Roger T. Benitez’s January 16 preliminary injunction to the Ninth Circuit. Judge Benitez’s order temporarily barred AB-5’s enforcement against motor carriers (and mirrored a preliminary injunction issued by a Los Angeles state court, which found AB-5 violated Congress’ 1994 determination that a uniform, 50-state rule endorsing the use of independent truckers was necessary to increase competition and reduce the cost of trucking services). The Teamsters followed their appeal with a motion to stay the district court’s order. On March 30, the Ninth Circuit rejected the Teamsters’ motion, which amounted, as one commentator put it, to a request to “turn the law back on.” The Ninth Circuit found that the union failed to show it would “be irreparably injured absent a stay, that a stay will not substantially injure the other parties, and that a stay would be in the public interest.” In so holding, the Court may have merely taken a union spokesperson at her word when she publicly declared that the “preliminary injunction has no practical effect on the employee status of” union port truckers because, supposedly, “whether you apply the ABC test under Dynamex, AB5, or the Borello test, they are employees under all tests” (a reminder that what a party says outside the courtroom often matters in it). The CTA’s response brief is due May 6, 2020 and oral argument will be placed on the next available argument calendar.

We’ll continue to monitor the CTA’s lawsuit, the ever-expanding list of AB-5 exemptions being pitched, and the impact the COVID-19 pandemic has on the AB-5 landscape in the courts and legislature, and on the ground among the gig workers it targets. Backed by a team at Ansa Assuncao LLP with decades of collective experience representing transportation industry clients throughout the U.S., including in matters involving independent owner-operator drivers, we also stand ready to offer you any assistance amidst this quickly-evolving legal landscape.

Heather L. Williams is a Partner in our Maryland office.