In an article published on March 23, 2023 in Law360, Kenneth Sulzer, chair of Constangy’s California class actions practice group, provided commentary on a recent interim decision on a Ninth Circuit case regarding employee classification law. The case centers around California’s Assembly Bill 5 (A.B. 5), which codified the state’s employee-friendly worker classifications. App-based companies, in this case Uber and Postmates, have challenged the classifications.
“This interim decision is ‘extraordinary’ in that the court kept alive the argument that A.B. 5 may be unconstitutional under the rational basis test,” said Sulzer, "It's quite unusual because in law school we learn that the whole case is won and lost on which standard of review applies. If it's rational basis, [the] statute's going to be upheld. This is somewhat of an anomaly, that you're unlikely to see legislation being struck down regularly, or even allowing a complaint to go forward, based on that theory."
“Carveouts to wage and hour statutes are not unusual, but A.B. 5 has a lot of exemptions and the best point that the plaintiffs made in this case is that there isn't an adequate articulation as to why Uber and Postmates were treated differently than gig companies like Taskrabbit, an app-based errand service,” Sulzer added.
This interim decision came on the heels of an appellate court reversing a decision on the constitutionality of California’s Proposition 22, which removed gig workers from A.B. 5. That decision has been appealed to the California Supreme Court. “If Prop 22 is upheld, which is not guaranteed with the makeup of the California Supreme Court, then ‘this really doesn't mean anything,’” Sulzer said. “Nevertheless, this decision may send a message to elected officials to temper their media statements even though previously they felt unencumbered because of the Golden State's political makeup. [Since] we essentially are, in essence, a one-party state, as far as the legislature is concerned, I think a lot of legislators, there's some loose talk that might not otherwise go on if there was at least some critical mass of opposition," he said.
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