A U.S. District Court judge for the Northern District of California reportedly ruled recently that Uber Technologies Inc. can challenge a lawsuit alleging the company misclassified California drivers as independent contractors. According to Bloomberg Law, the ride-hailing giant is arguing that Prop. 22, which exempted the gig economy companies to classify its workers as employees, is retroactive.
The court reportedly certified a class of more than 4,800 Uber drivers who allege they were wrongly classified as independent contractors under AB 5, the state’s strict worker status rule. As aforementioned, Uber’s motion was granted to amend its reply to include Prop. 22, a ballot initiative approved by voters in November, which excluded ride-share and delivery drivers from the requirements of AB5.
Uber’s challenge will reportedly include two defenses saying Prop. 22 presents a defense to independent contractor claims arising after its enactment, and that the class’ claims for the period before its enactment are abated under the new rule, according to Bloomberg.
Passed and signed into law by Governor Gavin Newsom in late 2019, AB 5 reclassifies most independent contractors or “gig” workers as employees, opening the door to receiving benefits and other perks usually reserved for full-time employees. But as it officially became law in Jan. 2020, it was immediately challenged by numerous industries, including rideshare companies. Uber and Lyft, in particular, held off drivers from being covered under the law, giving time for them to mount Prop. 22 for the Nov. election — which together with the food delivery companies, spent over $200 million on the campaign to pass. Ultimately, Prop 22. passed only days before a court order would have forced the companies to fall under AB 5 and start reclassifying employees.
Initially while certifying the class, Judge Edward M. Chen ruled that Prop. 22 didn’t apply retroactively, and therefore served only to limit the class period and foreclose damages after the law took effect. But in Apr., he walked back that ruling, agreeing with Uber that the retroactive application of the rule is ultimately a merits question that shouldn’t be decided in the context of class certification.
The class urged the judge to deny Uber’s motion to add the new defenses, arguing the motion is unreasonably delayed and would require them to re-conduct discovery. The class is prepared to file for summary judgment on Aug. 12.
In order to pass Prop. 22, Uber and Lyft made promises of providing its drivers with some benefits, like a health insurance subsidy. But now, California state lawmakers and drivers are saying the ridehailing companies have failed to make good on their campaign promises to deliver these benefits.
According to a Sacramento Bee report, drivers are finding that many of them don’t qualify for the stipends. The report noted that the stipends cover about 40% of the average premium for the lowest tier of a Covered California plan, especially if they have health coverage through the state. A survey commissioned by SEIU 721 reportedly showed that only 15% of drivers polled had applied for the stipend, and nearly 86% are likely to be deemed ineligible.