The U.S. Supreme Court recently decided not to review a case brought by Uber Technologies Inc. and Postmates Inc., which sought to overturn California’s employment classification law, known as AB 5. This act is designed to treat most workers as employees rather than independent contractors, affording them more extensive rights. The full U.S. Court of Appeals for the Ninth Circuit had previously dismissed the companies’ lawsuit, finding that the law had rational reasons for exempting certain industries while including others, a decision which the Supreme Court has now let stand. You can read more on this in the Bloomberg Law report.
Despite their exemption under Proposition 22—a law approved by voters in 2020 that virtually immunizes app-based ride-hail and delivery companies from AB 5—Uber and Postmates were attempting to address state enforcement efforts concerning alleged violations before this proposition’s implementation. The companies contended that the law violated their right to equal protection by unduly targeting their business models while exempting others, allegedly due to political biases. The Ninth Circuit, however, maintained that the legislature had a legitimate basis to differentiate between industries.
The Supreme Court’s refusal to hear the case means the ruling of the Ninth Circuit remains effective. For Uber and Postmates, this decision signifies a significant setback in their efforts to challenge California’s stringent criteria regarding worker classification. The Ninth Circuit’s opinion elaborated that California had plausible reasons for the variance in treatment, rationalizing that some companies posed a more considerable risk of worker misclassification.
The state’s decision not to respond to the petition underscores the certainty with which California authorities view the robustness of AB 5 and its compatibility with existing legal standards. This situation leaves Uber, Postmates, and other companies in the gig economy facing a continued legal landscape where worker classification laws will need to be navigated carefully.
The outcome suggests a potential precedent for how similar disputes might be assessed in other jurisdictions, highlighting the judiciary’s current stance on such intricate employment matters.