Search Results for: Lydia Olson

Concerned with the widespread misclassification of workers, the legislature enacted A.B. 5 in 2019. A.B. 5 codified the California Supreme Court’s Dynamex Operations W., Inc. v. Superior Ct., 416 P.3d 1, 5 (Cal. 2018) decision and extended the application of the ABC test beyond wage orders to other labor and employment legislation, including workers’ compensation, unemployment insurance, and disability insurance.

On December 30, 2019, Lydia Olson, Miguel Perez, Uber Technologies, Inc., and Postmates, Inc.jointly filed a complaint against the State of California and the Attorney General of California (collectively seeking declaratory, injunctive, and other relief based on their allegations that A.B. 5 violates the Equal Protection Clauses, the Due Process Clauses, and the Contract Clauses of the United States and California Constitutions. They sought a preliminary injunction to prevent Defendants from enforcing A.B. 5.

The district court denied Plaintiffs’ motion for preliminary injunctive relief. Plaintiffs appealed the district court’s denial of the preliminary injunction. In November 2020, shortly before the 9th Circuit Court of Appeals heard argument in that appeal, California voters approved Proposition 22, a ballot initiative that classifies rideshare and delivery drivers – like Plaintiffs Olson and Perez – as independent contractors, notwithstanding A.B. 5 or any other provision of law. Prop. 22 took effect on December 16, 2020, in accordance with the default rule provided by the California Constitution.

After Prop. 22 passed, but before the Court of Appeals issued a decision in the appeal of the preliminary injunction, Plaintiffs filed the operative Second Amended Complaint. Defendants moved to dismiss the Second Amended Complaint for failure to state a claim. The district court granted the motion. The district court determined that Plaintiffs’ new allegations concerning the amendments to A.B. 5 and Prop. 22 did not rescue their claims.Plaintiffs timely appealed that order.

A three-judge panel reversed in part, concluding that the district court erred by dismissing Plaintiffs’ Equal Protection claims. The panel concluded that Plaintiffs plausibly alleged that “the exclusion of thousands of workers from the mandates of A.B. 5 is starkly inconsistent with the bill’s stated purpose of affording workers the ‘basic rights and protections they deserve.’ “

Upon the vote of a majority of nonrecused active judges, a rehearing en banc was granted and the three-judge panel decision. Olson v. California, 88 F.4th 781 (9th Cir. 2023).was vacated It then conducted a review de novo of the district court order granting a motion to dismiss for failure to state a claim.

“We must decide whether A.B. 5’s differential treatment of app-based work arrangements in the transportation and delivery service industry, on the one hand, and app-based work arrangements in other industries, on the other hand, survives rational basis review. In other words, we must determine whether it was rational for the California legislature to apply one test to determine the classification of Uber drivers and a different test to determine the classification of dogwalkers who provide services through Wag!, the “Uber for dogs.”

Under the deferential rational basis standard, the Court was required to approach A.B. 5 with “a strong presumption of validity,” and will invalidate it only if Plaintiffs negate “every conceivable basis” which might justify the lines it draws.

“Plaintiffs have failed to carry that burden here. There are plausible reasons for treating transportation and delivery referral companies differently from other types of referral companies, particularly where the legislature perceived transportation and delivery companies as the most significant perpetrators of the problem it sought to address – worker misclassification.”

Under the deferential rational basis standard, the en banc court in the published opinion of Olson et.,al, v State of California et. al. 21-55757 (June 2024) concluded that there were plausible reasons for treating transportation and delivery referral companies differently from other types of referral companies, particularly where the legislature perceived transportation and delivery companies as the most significant perpetrators of the problem it sought to address- worker misclassification.

That A.B. 5 may be underinclusive because it does not extend the ABC test to every industry and occupation that has historically contributed to California’s misclassification woes does not render it unconstitutionally irrational.

The en banc court did not disturb the prior panel’s disposition of plaintiffs’ Due Process, Contract Clause, and Bill of Attainder claims. Accordingly, the en banc court reinstated Parts III.B, III.C, and III.D of Olson v. California, 62 F.4th 1206, 1220–23 (9th Cir. 2023).

In the case of Olson v. California, 62 F. 4th 1206, decided in March 2023 by the Ninth Circuit Court of Appeals, a California-based Uber driver, Nicole Olson, challenged the constitutionality of Assembly Bill 5 (A.B. 5), the California law that redefined many app-based workers as employees instead of independent contractors. WorkCompAcademy reported on this case soon after it was published.

A.B. 5, as amended, codified the “ABC test” adopted by the Supreme Court of California in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903 (2018), to categorize workers as employees or independent contractors for the purposes of California Labor and Unemployment Code provisions..However, A.B. 5 exempted a broad swath of workers from the Dynamex presumption.

Within a year of its enactment, A.B. 5 was amended by A.B. 170 and A.B. 2257. Both bills exempted even more workers from the Dynamex presumption.

Lydia Olson, Miguel Perez, Uber, Inc. and Postmates, Inc. filed a law suit in federal court to enjoin the State of California and the Attorney General of California , from enforcing California Assembly Bill 5 against them. The trial court denied a preliminary injunction, and the plaintiffs appealed. The 9th Circuit Court of Appeals heard argument in that case on November 18, 2020. However, on November 3, 2020, shortly before argument, Proposition 22 was adopted through California’s ballot initiative process.

Olson argued that A.B. 5 violated the Equal Protection Clause of the Fourteenth Amendment by creating an exemption for certain app-based businesses, like errand-running and dog-walking, while not exempting ride-sharing and delivery drivers like herself. This, she claimed, constituted unfair discrimination against a specific class of workers. The trial court ruled against her, and she appealed.

The 9th Circuit panel held that, even under the fairly forgiving rational basis review, Plaintiffs plausibly alleged that A.B. 5, as amended, violated the Equal Protection Clause for those engaged in app-based ride-hailing and delivery services. Thus, Plaintiffs plausibly alleged that the primary impetus for the enactment of A.B. 5 was the disfavor with which the architect of the legislation – Assemblywoman Lorena Gonzalez – viewed Uber, Postmates, and similar gig-based business models.
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Additionally, it ruled that Plaintiffs plausibly alleged that their exclusion from the wide-ranging exemptions, including for comparable app-based gig companies, could be attributed to animus rather than reason. The district court therefore erred by dismissing Plaintiffs’ equal protection claim.

The 9th Circuit panel therefore remanded the case for the district court to reconsider Plaintiffs’ motion for a preliminary injunction, considering the new allegations contained in the Second Amended Complaint.

This case was decided and published on March 17, 2023. Subsequently the Attorney General of California filed a Petition for Rehearing on April 28, 2023.

The Attorney General argued in it’s 62 page Petition that the decision was “a highly unusual departure from this Court’s consistent practice of affording States “wide latitude … in managing their economies.” And went on to provide examples such as “The equal-protection analysis in the panel opinion conflicts with the Court’s recent decision in American Society of Journalists (Am. Soc’y of Journalists & Authors Inc. v. Bonta 15 F.4th 954 (9th Cir. 2021)) – and many other decisions of this Court and the Supreme Court treating rational-basis review as “a paradigm of judicial restraint.”

Court Docket entries show a flurry of Amicus briefs were then filed by various interest groups arguing positions supporting the Petition for Rehearing including the states of Arizona, Washington, Connecticut, District of Columbia, Hawaii, Illinois, Maine, Maryland, Commonwealth of Massachusetts, Michigan, Minnesota, New Jersey, New York, Nevada, Commonwealth of the Northern Mariana Islands, Oregon and Vermont.

On December 18, 2023 The Court of Appeals for the 9th Circuit granted the Petition for Rehearing. The order said “Upon the vote of a majority of nonrecused active judges, it is ordered that this case be reheard en banc pursuant to Federal Rule of Appellate Procedure 35(a) and Circuit Rule 35-3. The three-judge panel opinion is vacated.”

En banc oral argument will take place during the week of March 18, 2024, in San Francisco, California. The date and time will be determined by separate order.

A.B. 5, as amended, codified the “ABC test” adopted by the Supreme Court of California in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903 (2018), to categorize workers as employees or independent contractors for the purposes of California Labor and Unemployment Code provisions..However, A.B. 5 exempted a broad swath of workers from the Dynamex presumption.

These statutory exemptions included: California licensed insurance businesses or individuals, physicians and surgeons, dentists, podiatrists, psychologists, veterinarians, lawyers, architects, engineers, private investigators and accountants; registered securities broker-dealers and investment advisers; direct sales salespersons; commercial fishermen working on American vessels for a limited period; marketers; human resources administrators; travel agents; graphic designers; grant writers; fine artists; payment processing agents; certain still photographers or photo journalists; freelance writers, editors, or cartoonists; certain licensed estheticians, electrogists, manicurists, barbers or cosmetologists; real estate licensees; repossession agents; contracting parties in business-to-business relationships; contractors and subcontractors; and referral agencies and their service providers.

Within a year of its enactment, A.B. 5 was amended by A.B. 170 and A.B. 2257. Both bills exempted even more workers from the Dynamex presumption.

Lydia Olson, Miguel Perez, Uber, Inc. and Postmates, Inc. filed a law suit in federal court to enjoin the State of California and the Attorney General of California , from enforcing California Assembly Bill 5 against them. The trial court denied a preliminary injunction, and the plaintiffs appealed. The 9th Circuit Court of Appeals heard argument in that case on November 18, 2020. However, on November 3, 2020, shortly before argument, Proposition 22 was adopted through California’s ballot initiative process.

Shortly before it heard argument on Plaintiffs’ appeal of the district court’s order denying their motion for a preliminary injunction, Plaintiffs filed their Second Amended Complaint. The Second Amended Complaint updated Plaintiffs’ original claims to incorporate the amendments to A.B. 5 made by A.B. 2257. It alleged that A.B. 5, as amended, violates state and federal Equal Protection Clauses, Due Process Clauses, Contract Clauses, and Bill of Attainder Clauses of the U.S. Constitution

Defendants moved to dismiss Plaintiffs’ Second Amended Complaint for failure to state a claim on which relief could be granted, and the district court granted Defendant’s motion in its entirety, with prejudice. The plaintiffs then appeal the district court’s orders denying their motion for a preliminary injunction and dismissing their Second Amended Complaint. The trial court was reversed in part, affirmed in part, and remanded in the published case of Lydia Olson, et al v. State of California – 21-55757 (March 2023).

The 9th Circuit panel first held that, even under the fairly forgiving rational basis review, Plaintiffs plausibly alleged that A.B. 5, as amended, violated the Equal Protection Clause for those engaged in app-based ride-hailing and delivery services. Thus, Plaintiffs plausibly alleged that the primary impetus for the enactment of A.B. 5 was the disfavor with which the architect of the legislation – Assemblywoman Lorena Gonzalez – viewed Uber, Postmates, and similar gig-based business models.

Additionally, Plaintiffs plausibly alleged that their exclusion from the wide-ranging exemptions, including for comparable app-based gig companies, could be attributed to animus rather than reason. The district court therefore erred by dismissing Plaintiffs’ equal protection claim.

The panel held that the district court correctly dismissed Plaintiffs’ due process claims because Plaintiffs failed to plausibly allege that A.B. 5, as amended, completely prohibited them from exercising their “right to engage in a calling.” In addition, Plaintiffs’ allegations did not plausibly allege that A.B. 5, as amended, would bar plaintiffs Olson and Perez from continuing their work as “business owners in the sharing economy” with network companies that were exempted from A.B. 5, as amended.

The panel held that A.B. 5, as amended, did not violate the Contract Clause because it neither interfered with Plaintiffs’ reasonable expectations nor prevented them from safeguarding or reinstating their rights. Plaintiffs’ Bill of Attainder claims likewise failed because Plaintiffs did not plausibly allege that A.B. 5, as amended, inflicted punishment on them.

Addressing the district court’s denial of Plaintiffs’ motion for a preliminary injunction, the panel noted that the district court’s order was based on allegations contained in the Initial Complaint, which did not include Plaintiffs’ allegations regarding facts – namely the passage of A.B. 2257 and Proposition 22 – that did not exist when the Initial Complaint was filed.

The panel therefore remanded the case for the district court to reconsider Plaintiffs’ motion for a preliminary injunction, considering the new allegations contained in the Second Amended Complaint.