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Gig economy: California Appellate Court affirms Uber and Lyft must reclassify California drivers as employees

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By Jack Schaedel and Jamin Xu, Firm:  FordHarrison

Uber and Lyft will be required to reclassify drivers and riders previously considered independent contractors as employees following a ruling from a California appeal court affirming the preliminary injunction that imposed this obligation on 10 August 2020.

On 22 October 2020, a California appellate court affirmed a preliminary injunction requiring Uber and Lyft to reclassify California drivers from independent contractors to employees and to comply with the California Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission wage orders, as requested by California State Attorney General Xavier Becerra and the City Attorneys of Los Angeles, San Francisco, and San Diego. A further discussion of that original 10 August 2020 San Francisco Superior Court’s original 33-page decision can be found here.

Summary of the Order

The appellate court unanimously sided with the Superior Court in holding that the State and city governments are ultimately likely to succeed on the merits in arguing that Uber’s and Lyft’s drivers are employees, not independent contractors, under the rigorous ABC test set forth under California Assembly Bill 5 (‘AB 5’).

AB 5, which took effect at the beginning of 2020, codified the test to determine whether a worker can be classified as an independent contractor set forth under the California Supreme Court case Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903, which presumes workers are employees unless an employer can establish three factors:

(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;

(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Click here https://theword.iuslaboris.com/hrlaw/insights/us-worker-or-independent-contractor-californias-new-test for a full discussion of Dynamex.

Because Dynamex was issued over two years ago, the Court reasoned that companies like Uber and Lyft, who utilise independent contractors as a significant portion of their workforce, have had significant time to contemplate how they can proceed with reclassifying workers as employees. Therefore, the Court reasoned that requiring Uber and Lyft to comply with the preliminary injunction would not result in irreparable harm. On the contrary, the court specifically affirmed the trial court’s reasoning that:

‘rectifying the various forms of irreparable harm shown by the People more strongly serves the public interest than protecting Uber, Lyft, their shareholders, and all of those who have come to rely on the advantages on online ride-sharing delivered by a business model that does not provide employment benefits to drivers.’

Therefore, the Court required Uber and Lyft to comply with the San Francisco Superior Court’s preliminary injunction order beginning 30 days after the Court issues its forthcoming remittitur of the appeal.

Likely impact and Proposition 22

Although the legislature has recently enacted exemptions for certain types of workers, including certain writers, musicians and artists, as well as individuals providing certain ‘professional services,’ from the AB 5 test (see here), this most recent decision signifies that under the current ABC test, Uber’s and Lyft’s drivers are unlikely to be able to remain as independent contractors, in the absence of subsequent intervention from the legislature or the passage of Proposition 22 on California’s ballot initiative this November (see here for details of Proposition 22).

However, employers should keep in mind that even the passage of Proposition 22 is unlikely to provide their specific businesses with exemptions from AB 5, as it is intended to apply specifically to ride-hailing companies so that their drivers can be classified as independent contractors in exchange for increased worker protections such as guarantees in minimum earnings, expense reimbursements, healthcare subsidies and insurance coverage for on the-job injuries.

Furthermore, this decision signifies that a government enforcement action brought by the state and local governments of California will be able to seek compliance with AB 5 through the use of preliminary injunctions even at the early stages of a lawsuit, while the case is ongoing.

If a preliminary injunction is granted, employers could find themselves having to provide workers, on very short notice, all benefits commonly associated with non-exempt employees in California, including minimum and overtime wages, meal and rest period premiums, reimbursements for business expenses, sick leave, workers’ compensation coverage, unemployment insurance, paid family and sick leave, and wage replacement programs like disability insurance. Employers could also find themselves having to pay taxes and penalties on very short notice.

Additionally, even if Proposition 22 or any other legislative exemptions pass in the near future, their effects are unlikely to be retroactive. Therefore, entities who use independent contractors may continue to be exposed to legal liability through government enforcement mechanisms and/or class and representative Private Attorneys General Act (‘PAGA’) actions.

Businesses utilising independent contractors are advised to continue to track legal developments and consult with experienced labour and employment counsel to evaluate the continuing viability of this classification for their specific business.

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Judge: Nevada jobless office in contempt in gig workers case | Business News

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RENO, Nev. (AP) — A state court judge held the Nevada unemployment office in contempt and gave it until the end of the month to comply with his July court order to resume paying pandemic relief benefits to almost 9,500 out-of-work gig workers and independent contractors.

“These people need to be paid,” Washoe County District Court Judge Barry Breslow declared Thursday as he imposed a $1,000 fine on the Department of Employment, Training and Rehabilitation, the Las Vegas Review-Journal reported .

The judge scheduled a Dec. 31 compliance hearing and warned of additional action if the state doesn’t release Pandemic Unemployment Assistance funds by Christmas.

Bradford McEwen, an independent contractor who had the pandemic payments frozen after 21 weeks, told the Review-Journal he was disappointed with the ruling. He said claimants deserve compensation for hours of fruitless calls to Department of Employment, Training and Rehabilitation hotlines.

Self-employed photographer Dave Cherkis is waiting to receive pandemic benefits that he filed for in May. He derided the nominal fine as “a Band-Aid on a compound fracture.”

Breslow’s order came in a lawsuit that attorney Mark Thierman filed in May on behalf of independent contractors and self-employed workers seeking immediate payment of pending pandemic claims.

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Judge: Nevada jobless office in contempt in gig workers case

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RENO, Nev. (AP) — A state court judge held the Nevada unemployment office in contempt and gave it until the end of the month to comply with his July court order to resume paying pandemic relief benefits to almost 9,500 out-of-work gig workers and independent contractors.

“These people need to be paid,” Washoe County District Court Judge Barry Breslow declared Thursday as he imposed a $1,000 fine on the Department of Employment, Training and Rehabilitation, the Las Vegas Review-Journal reported .

The judge scheduled a Dec. 31 compliance hearing and warned of additional action if the state doesn’t release Pandemic Unemployment Assistance funds by Christmas.

Bradford McEwen, an independent contractor who had the pandemic payments frozen after 21 weeks, told the Review-Journal he was disappointed with the ruling. He said claimants deserve compensation for hours of fruitless calls to Department of Employment, Training and Rehabilitation hotlines.



Self-employed photographer Dave Cherkis is waiting to receive pandemic benefits that he filed for in May. He derided the nominal fine as “a Band-Aid on a compound fracture.”


Breslow’s order came in a lawsuit that attorney Mark Thierman filed in May on behalf of independent contractors and self-employed workers seeking immediate payment of pending pandemic claims.

At the time, Nevada was the last state in the nation to begin taking applications for the pandemic payments.

State officials contended the jobless benefits office was battling rampant fraud and needed to determine the legitimacy of each claim before paying it out.


Breslow commissioned a 310-page report from a special hearing master that identified bottlenecks and breaks in processing payments for so-called gig workers.

The judge determined the swamped state unemployment office should not have decided that pandemic applicants were ineligible unless they completely ceased working.

His July 22 order said the Department of Employment, Training and Rehabilitation could not stop paying pandemic claims, with exceptions for failing to meet certain eligibility benchmarks and suspected fraud, unless a worker received a hearing or was provided some means to protest.

As of Nov. 21, nearly 650,000 claims were filed and 74,000 Nevadans continued to receive pandemic payments since the program rolled out in May, the Review-Journal reported.

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Elgin singer one of first to get back on stage for live gig

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AN ELGIN singer will be one of the first local acts to get back to gigging this weekend at an Inverness venue.

Live music is returning to a second city venue this weekend as The Botanic House gets ready to welcome back performers and music fans.

Singer Colleen Murphy (36), from Elgin’s Barlink Road, will kick off the first night line-up on Saturday, December 6, at 5pm.

Colleen said: “It’s been a long and hard road for all us entertainers.

“This is definitely a light at the end of the tunnel.

“I want to wish everyone to ‘break a leg’ over the next few weeks and welcome all from tier 1 to join us. Let the music play.”

The Castle Street venue, which opened just over a year ago, has had strict Covid-19 procedures in place since its post-lockdown return in September.

Further precautions have now been taken, including social distancing at all times within the venue, to allow a return to live music.

Elgin-based singer Colleen Murphy.
Elgin-based singer Colleen Murphy.

The return of live gigs will be music to the ears for local acts – many of whom have found themselves out of work for nine months.

The Botanic House general manager Tom Wilding said: “We are really excited to get live music back into The Botanic, as a live music and entertainment venue.

“The past months have been challenging with the constantly changing restrictions.

“In true Highland spirit though, we have risen to the challenge, reinventing ourselves to give our loyal customers a great venue with new and exciting food and drink options to enjoy.”

Gigs are planned until the end of the year.

Last month fellow Inverness venue The Ironworks held what was believed to be the first live indoor show in Scotland since lockdown in March when folk-rock band Torridon performed to a socially distanced audience of 100 people.

Back in April, Colleen, a full-time social work student at the Robert Gordon University, raised nearly £500 for Moray Women’s Aid by staging an online gig from her living-room.


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