Olson v. State of California (2023)
California Assembly Bill 5 codified the presumption adopted by the California Supreme Court decision in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 that, as phrased by the Ninth Circuit in this case, “ ‘a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor, unless the hiring entity’ makes the requisite showing under the [Dynamex] ABC test.” However, as the Ninth Circuit noted, Assembly Bill 5, “exempted a broad swath of workers from the Dynamex presumption,” and “[i]t is undisputed that the enactment of A.B. 5 was largely driven by a perceived need to curb reported abuses in the gig economy, particularly rideshare companies and analogous platforms.”
Postmates, Uber, and two individuals (plaintiffs), filed a complaint claiming Assembly Bill 5 violates the Equal Protection, Due Process, Contract, and Bill of Attainder Clauses of the United States and California Constitutions, and sought to enjoin the State of California from enforcing the bill. The district court dismissed all claims and plaintiffs appealed.
The Ninth Circuit reversed the dismissal of plaintiffs’ Equal Protection claims. The court held that plaintiffs plausibly alleged that (a) Assembly Bill 5 violated the Equal Protection Clauses by applying its presumption of employee status to individuals engaged in app-based ride-hailing and delivery services, and not to the many other businesses that Assembly Bill 5 exempts from the presumption, (b) the primary reason for Assembly Bill 5’s enactment was that the creators of the bill viewed “gig-based” business models with disfavor, as shown by the exemption of thousands of workers from Assembly Bill 5’s presumption of employee status and the “piecemeal fashion in which the exemptions were granted” to some types of workers and not others, and (c) plaintiffs’ exclusion from the exemption is attributable to animus rather than reason, as demonstrated by the statement of a state legislator that she is “ ‘open to changes in the bill . . . , including an exemption for musicians–but not for app-based ride-hailing and delivery giants.’ ”
