Gig-Work Legal Shield Prop 22 deemed “unconstitutional”

Historic Proposition 22, which provided exceptions to California’s AB5 law, was ruled unconstitutional by a California judge.

Under Proposition 22, which was passed in November 2020, delivery men and drivers were not subjected to a test to determine the independent contractor status described in Assembly Bill 5 (AB5 ). The three-part test, officially known as the ABC test, examined whether workers were free from all control of the company, did not perform work essential to the business of the company, and had an established occupation. independently. Gig employment companies said they briefly tried to pass the test, with Uber saying their main business was not carpooling but building apps. Concert companies quickly switched to a voting measure instead, backing it with a campaign of more than $ 200 million to get the vote. The proposal passed with a wide margin.

California Superior Court judge Frank Roesch ruled the measure unconstitutional for two main reasons. According to Roesch ordinance filed in Alameda County, the measure “limits the power of a future legislature to define application-based drivers as workers subject to the workers’ compensation law”. It also “defines unrelated legislation as an ‘amendment’ and is unrelated to the stated” theme, purpose or subject of Proposal 22. “

There is a lot of legal jargon to say that the bill unduly restricts legislative power over workers’ compensation and violates the state’s goal of protecting workers through future legislation. . Analysts Paul Gallant, John Blackledge and Andrew Charles of investment bank Cowen have distilled this legal jargon in a new report on Judge Roesch’s order.

Analysts downplayed the importance of the order and say there will be “no immediate effect” and while there are effects from this order, it “is not a game-changer for Uber / Lyft / Grubhub / DoorDash “.

They point out a few things that prevent it from being of concern to businesses. First, an appeal is almost certain, which will extend the validity of Proposition 22, as only an appeals court can overturn a law like this electoral measure. Appeals, analysts say, normally take around 12 months (three to four months if expedited), and then the losing party can take the case to the California Supreme Court, which would add another year to the process.

There is also the question of whether the decision will be upheld. Roesch, analysts point out, was censored last year for not being neutral and is seen as a politically progressive judge, which could mean the decision is overturned.

Even if Proposition 22 fails, there will be more litigation around the AB5 rules and to whom they apply.

Gallant, who covers police in Cowen, wrote that there is a potential danger to delivery companies as it could prompt action in Washington, DC.

“Friday’s decision may be slightly negative in Washington as it gradually increases the interest of the Biden administration in ‘doing something’ about concert workers,” Gallant writes. “This certainly remains a possibility, but given the pending appeals and the likelihood (in our opinion) of resuming sectoral negotiations if proposal 22 fails, we continue to believe that the action of the Ministry of Labor does not is not a priority for the administration. “

The impact of this decision will certainly continue to be felt in the slow pace of law and legislative action. So far, Proposition 22 being deemed “unconstitutional” is attracting attention, but any real impact is months or years away.

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