California's Ninth Circuit Issues Another Body Blow to AB5

The Ninth U.S. Circuit Court of Appeals is on a tear this week, dismantling the court rulings that have supported AB5, the so-called California gig workers law. Crafted to target rideshare companies and the trucking industry, since AB5 was signed into law in 2019, it has upended the careers of approximately 4.5 million freelancers, independent contractors, and the self-employed, and destroyed the independent contractor model in the state.

On Monday, the Ninth Circuit overturned a Superior Court of Alameda decision that deemed California’s Proposition 22, which allowed rideshare drivers to maintain their status as independent contractors, unconstitutional. Proposition 22 was placed on the November 2022 ballot and approved by a wide margin. It also helped to gut AB5 and set precedent to discourage similar laws being drafted in other states, which is why Big Labor and their allies in the California Attorney General’s office continue to try and overturn the will of the voters as well as mount challenges to any lawsuit brought.

The Ninth Circuit bookended the week of bad news for proponents of AB5 by serving them yet another defeat.

The 9th Circuit has issued a scathing rebuke of Newsom and the Legislature. The court advanced a case alleging AB 5 is unconstitutional and rooted in "corruption, pure spite, or naked favoritism."

— Kevin Kiley (@KevinKileyCA) March 18, 2023

A U.S. appeals court on Friday revived a lawsuit by Uber Technologies Inc (UBER.N) and subsidiary Postmates Inc challenging a California law that would require them to provide more proof that workers are independent contractors, a classification that helps the companies save millions.

In a major win for app-based services that heavily rely on contractors, the San Francisco-based 9th U.S. Circuit Court of Appeals said the state must face claims that the law known as AB5 is unconstitutional because it improperly singles out app-based transportation businesses while exempting many other industries.

The decision gave further weight to what opponents of AB5 have been saying all along: If you can carve out exemptions for one group, but exclude others with no solid or consistent basis, then your law is not worth the paper it is written upon. Karen Anderson, journalist and founder of the Facebook group Freelancers Against AB5 wrote in 2021:

To date, approximately 100 professions and industries in California have been exempted from Assembly Bill 5, either in the original law that went into effect on January 1, 2020, or in the “fix-it” bill (Assembly Bill 2257) that followed nine months later. The arbitrary exemption process picks winners and losers, and has resulted in nothing less than total chaos, anguish, upheaval, outrage, lost livelihoods, shuttered businesses, and a slew of lawsuits.

Thanks to the arbitrary nature of the exemptions, the Ninth Circuit has deemed that the lawsuits, even the ones that had been previously rejected or dismissed, must now be reconsidered.

A three-judge 9th Circuit panel on Friday said the “piecemeal fashion” of the exemptions to the law was enough to keep Uber’s lawsuit alive.

“The exclusion of thousands of workers from the mandates of AB5 is starkly inconsistent with the bill’s stated purpose of affording workers the ‘basic rights and protections they deserve,'” Circuit Judge Johnnie Rawlinson wrote for then court.

The court said the federal judge in Los Angeles who dismissed the case must also reconsider her earlier ruling declining to block AB5 pending the outcome of the lawsuit.

This is how Governor Gavin Newsom lost the pandemic lawsuits brought by houses of worship: because there was a clear pattern of preferential treatment given to secular gatherings like entertainment shows, while discriminating against religious gatherings. The constitutional right to freedom of religion and assembly was upheld by the courts. Thanks to the Ninth Circuit’s ruling, rideshare and app-based independent contractors, as well as the trucking industry and journalists, can potentially revive their challenges, and new challenges based on constitutional grounds can be brought.

Attorney General Rob Bonta issued this statement to Reuters regarding the Ninth Circuit decisions:

The office of California Attorney General Rob Bonta, a Democrat, said in a statement that it was reviewing the decision and assessing its next steps.

“We will continue to defend laws that are designed to protect workers and ensure fair labor and business practices,” Bonta’s office said.