California Superior Court: ABC test for concert workers is retroactive, in coup for Uber, Lyft

California’s stringent ABC test, which makes it difficult to say that workers are self-employed, applies retroactively, the state Supreme Court ruled on Thursday in a decision that could harm Uber, Lyft and other show companies in several Law Suit.

The ABC test was issued in an April 2018 decision called Dynamex that said workers should be considered employees, unless (a) they work out of the contracting entity’s control; (b) perform work outside the contracting entity’s normal business court; and (c) having independent businesses doing this type of work.

“Concerns about public policies and justice, such as protecting workers and benefiting companies that comply with wage order obligations, favor the retroactive application of Dynamex,” said a unanimous opinion authored by Supreme Court President Tani Cantil-Sakauye. The Ninth Circuit Court of Appeals in May 2019 said that Dynamex should be retroactive.

Dynamex’s decision underlies California’s controversial AB5 labor law, which codified the ABC test while exempting multiple professions and expanding its reach beyond salary orders.

Uber, Lyft, DoorDash and other show companies classify workers as independent contractors rather than employees, saying they trust the flexibility of this model. It also saves millions of dollars in benefits, minimum wage, overtime and other expenses. Concert companies spent $ 220 million convincing voters to approve Proposal November 22, which keeps workers as independent contractors and exempts them from AB5 since its adoption in mid-December. Union groups filed lawsuits to overturn the measure this week.

Prop. 22 does not protect show companies retroactively. They are facing a series of lawsuits over job classification, both from government agencies and their own workers. The Supreme Court’s decision means that if concert companies lose these lawsuits, they could face far greater penalties, as they can be held responsible for actions before Dynamex goes into effect in April 2018.

In the largest one, the California attorney general and three city attorneys sued Uber and Lyft in May. The California labor commissioner sued the two hitchhiking companies in August, saying they committed theft of wages for incorrect driver classification. Several drivers and messengers have joined forces in misclassification lawsuits against Uber, Lyft and other show companies.

“They’ll be out of luck,” said Bob Eassa, a partner at Duane Morris in San Francisco, a management law firm. “For any case that is pending, the test that applies to them will be Dynamex and will go as far as the statute of limitations allows”, usually three or four years, depending on the applicable business code.

“Although Uber and Lyft spend record amounts of money to rewrite the law for their own benefit, they cannot change the fact that they were breaking the law years before Prop. 22 by failing to classify their drivers as employees, ”said John Coté, a spokesman for San Francisco City Attorney Dennis Herrera, who is one of the plaintiffs in the California Attorney General’s suit against hitchhiking companies. “This decision reinforces the position that we maintained throughout the time.”

Uber and Lyft did not immediately respond to requests for comment. The California attorney general’s office declined to comment.

Shannon Liss-Riordan, a Boston lawyer who filed incorrect classification cases on behalf of concert workers and caretakers, said the decision should help California workers seek redress for wage violations that occurred before April 2018. She has pending lawsuits and arbitrations against Uber, Lyft, Grubhub, DoorDash, Postmates, Instacart, Shipt and Amazon.

The court “emphasized that this rigorous test was necessary because the earlier, more flexible standard … led to inconsistent results that did not adequately protect workers,” she said by email. “This decision is yet another accusation by Prop. 22. ”

But MC Sungaila, president of the appeal practice at the Buchalter law firm, said the new decision could be detrimental to employers.

“In the wake of the pandemic, this raises concerns for small businesses that could be hit by retrograde wages and hours of employment lawsuits,” she said in a statement.

In addition to concert workers, the ABC test affects other sectors, said Laura Padin, a senior lawyer at the National Employment Law Project in Washington.

“We see (incorrect classification) a lot in sectors where the work is performed mainly by people of color, such as janitorial, home care and truck transport,” she said. “Often, these are low-wage industries, where workers don’t have much bargaining power.”

The court’s decision “will make it much easier to hold companies that have been using this type of scheme for years,” she said.

For example, janitorial firm Jan-Pro, in a case that also underlies Thursday’s decision, shied away from turning its workforce predominantly from immigrants to employees by requiring its janitors to certify that they owned independent franchises. That was “although Jan-Pro controlled most of the work and they were not running their own businesses,” she said. “Jan-Pro was able to escape from workplace protections and transfer the risks and expenses normally assumed by the employer to workers.”