104 F.4th 66
9th Cir.2024Background
- California enacted Assembly Bill 5 (A.B. 5) to combat worker misclassification, primarily targeting companies that classify workers as independent contractors rather than employees.
- A.B. 5 codifies the "ABC test" for distinguishing employees from independent contractors and applies it broadly, but certain occupations and industries are exempt, subject to the older, more flexible Borello test.
- Plaintiffs (Uber, Postmates, and individual drivers) challenged A.B. 5, asserting that its targeting of transportation and delivery app-based companies for stricter classification standards violated federal and California Equal Protection Clauses, among other grounds.
- The district court dismissed the plaintiffs’ claims and denied their request for a preliminary injunction, finding the law rationally related to legitimate state interests.
- A three-judge Ninth Circuit panel initially reversed in part, reviving the Equal Protection claims, but the full court (en banc) later reheard the case, vacated the panel decision, and affirmed dismissal.
- The passage of Proposition 22 affected prospective application but did not moot the instant challenge, as past liability under A.B. 5 remained at issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Equal Protection (Different tests for worker classification) | Treating app-based delivery/transportation companies (Uber, Postmates) differently from similar platforms (e.g., Wag!, TaskRabbit) is arbitrary and irrational. | The distinction is rational; legislature perceived transportation/delivery firms as major contributors to misclassification, meriting targeted regulation. | A.B. 5 survives rational basis review; distinction is plausible and rationally related to the state's goal of addressing misclassification. |
| Underinclusiveness/Exemptions | Exemptions for certain industries and occupations undermine A.B. 5’s stated purpose, making the scheme irrational. | Legislature can address misclassification incrementally and grant exemptions to industries where workers resemble true independent contractors. | Underinclusiveness does not render law irrational under Equal Protection; piecemeal steps are permissible. |
| Alleged Animus and Political Favoritism | A.B. 5 targets gig companies due to animus or political motivations, making the statute unconstitutional. | Law is based on legitimate policy, not animus; even if politically motivated, a rational basis exists. | Court finds plausible legitimate reasons for the law; declines to address animus arguments further. |
| Preliminary Injunction | Plaintiffs are likely to suffer harm without an injunction and are likely to succeed on the merits. | Plaintiffs’ harm is speculative and the law is likely constitutional; public interest favors upholding law. | District court correctly denied preliminary injunctive relief. |
Key Cases Cited
- FCC v. Beach Communications, Inc., 508 U.S. 307 (1993) (sets standard for rational basis review—upholds classification if any conceivable basis exists)
- S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 769 P.2d 399 (Cal. 1989) (sets out multifactor test for independent contractor versus employee under California law)
- Dynamex Operations West, Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018) (adopts the ABC test for worker classification under California wage orders)
- Vance v. Bradley, 440 U.S. 93 (1979) (legislature's underinclusiveness does not render a law unconstitutional under rational basis)
- Williamson v. Lee Optical of Oklahoma Inc., 348 U.S. 483 (1955) (rational basis review does not require perfect fit between law's means and ends)
- Nordlinger v. Hahn, 505 U.S. 1 (1992) (defining similarly situated groups for Equal Protection challenges)