US Supreme Court Leaves Lower Court’s AB 5 Ruling in Place

The U.S. Supreme Court announced on Oct. 15 that it would not review an unsuccessful challenge to California’s law, Assembly Bill 5, which classifies most workers as employees.

We’ve gathered articles on the news from SHRM and other outlets.

9th Circuit Decision

The justices left alone a decision by the 9th U.S. Circuit Court of Appeals that dismissed Uber Technologies’ and its subsidiary Postmates’ challenge to California’s worker-friendly employment classification law AB 5.

(Bloomberg Law)

Mixed Results for Uber

The justices denied Uber’s petition for review of a 9th U.S. Circuit Court of Appeals ruling that it failed to show that the 2020 California law known as AB 5 illegally singled out app-based transportation services while exempting other industries.

Drivers for app-based services are now exempt from AB 5 under an industry-backed 2020 ballot initiative known as Proposition 22. The California Supreme Court upheld Proposition 22 in July, rejecting a union’s claims that it violated the state’s constitution. The California Supreme Court’s decision was unanimous. More than 1.4 million Californians are app-based gig workers.

(Reuters, SHRM, and Cal Matters)

Fair Labor Standards Act’s Scope

One of the arguments for reclassifying independent contractors as employees is that contractors are not entitled to minimum wage, overtime pay, and other benefits under the federal Fair Labor Standards Act. However, independent contractors have the potential to earn higher compensation compared to full-time employees. Nonetheless, they are also responsible for their own expenses, may experience fluctuations in income, and may not have the same job stability as full-time employees. Another way to address these challenges without eliminating the flexibility of independent and gig work is to provide portable benefits that are not tied to a particular client.

(SHRM)

DOL Narrowed Independent Contractor Definition

The U.S. Department of Labor issued a final rule earlier this year narrowing the scope of who is an independent contractor.

The rule “is both extremely vague for businesses yet extremely inflexible for independent workers,” said Tim Taylor, an attorney for Holland & Knight in Tysons, Va. “The last 20 years have seen dynamic technological advancements that lets people work where they want, when they want, for whom they want, as much as they want. The new rule threatens that progress for workers.”

(SHRM)