Supreme Court declines to hear Uber’s challenge to California’s gig worker law, upholding AB 5 and potentially reshaping the landscape of independent contracting across America.
At a Glance
- U.S. Supreme Court refuses to review Uber and Postmates’ challenge to California’s AB 5 law
- AB 5 uses the “ABC test” to classify many gig workers as employees
- Proposition 22 currently exempts app-based drivers from AB 5 in California
- Decision could lead to increased operational costs for gig economy companies
- Ruling may influence similar legislation in other states
Supreme Court’s Decision Reinforces AB 5
In a significant blow to gig economy giants, the U.S. Supreme Court has declined to hear Uber and Postmates’ challenge to California’s Assembly Bill 5 (AB 5). This decision effectively upholds the law that classifies many gig workers as employees rather than independent contractors. The move marks another victory for AB 5 in federal court, following previous rejections of similar challenges.
The Supreme Court’s refusal to review the case comes after an en banc panel of the 9th U.S. Circuit Court of Appeals had already upheld AB 5, stating that it did not unfairly target gig drivers. This decision reinforces the law’s validity and potentially paves the way for its broader implementation.
Backers of California’s AB5 independent contractor law have scored a fresh victory after the U.S. Supreme Court declined to review the Postmates/Uber case. https://t.co/q6LliyMJVb
— FreightWaves (@FreightWaves) October 16, 2024
Implications for Gig Economy Companies
AB 5 uses the “ABC test” to determine if a worker is an employee or an independent contractor. This test has been particularly contentious for the transportation industry, as it could significantly impact their business models. Uber had argued that AB 5’s exemptions for certain app-based services violated equal protection laws, but the court found rational reasons for these differences.
The decision could lead to increased operational costs for companies like Uber and Lyft, potentially affecting service availability and pricing for consumers. It also opens the door for California to pursue labor lawsuits against ride-sharing companies for alleged misclassification of drivers, which could result in significant back pay claims.
The Supreme Court rejected a challenge by Uber and other ride-hailing and delivery-service companies Tuesday to a California law classifying their drivers as employees rather than contractors, with the right to minimum wages, overtime and other benefits. https://t.co/AcZXmikzdo
— San Francisco Chronicle (@sfchronicle) October 16, 2024
Proposition 22 and Ongoing Legal Battles
Despite the Supreme Court’s decision, Proposition 22, passed by California voters in 2020, currently exempts app-based drivers from AB 5, maintaining their independent contractor status. Uber and other companies invested over $200 million to support Prop 22, which the California Supreme Court upheld in July.
However, legal challenges to Prop 22 continue, highlighting the ongoing tension between worker protections and the evolving nature of modern employment in the digital age. The California Trucking Association’s efforts to challenge AB 5 in the trucking industry have been unsuccessful, though the Owner-Operator Independent Drivers Association continues to pursue the case.
Broader Implications for Labor Regulations
The Supreme Court’s decision to let AB 5 stand could influence similar legislation in other states, potentially transforming the gig economy nationwide. At the federal level, the U.S. Department of Labor is proposing stricter rules for classifying workers as independent contractors under federal wage law, signaling a broader shift in labor regulations.
As this issue develops, it will be crucial to monitor its effects on job creation, economic growth, and individual freedoms in the workplace. The ongoing legal battles highlight the complex balance between worker protections and the flexibility that many gig workers value.
Sources:
- US Supreme Court won’t hear Uber’s challenge to California gig work law
- AB5 notches another win: Supreme Court won’t hear Postmates/Uber case
- Supreme Court Won’t Hear Uber Challenge to California Gig Worker Law