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Gig Economy

California Independent Contractor Law Faces Withering Attacks

June 13, 2023
The rule-making process of AB 5 draws condemnation from the Ninth Circuit U.S. Court of Appeals, which could endanger major parts of the legislation.


An old adage holds that you should think twice before speaking, but in the case of Lorena Gonzalez Fletcher it is beginning to look like both thinking and talking might actually end up irreparably damaging her reputation.

She is the former California state legislator who introduced and pursued to enactment the anti-independent contractor law called AB 5 (at that time, she used her maiden name of Lorena Gonzalez). Although it was hailed by union advocates and copied by other states at least in part and was included in President Biden’s massive labor bill that stalled in Congress, AB 5 proved to be enormously controversial in California, especially among many of the workers it targeted.

In 2018, the California Supreme Court established a test for determining who could be legally considered an independent contractor. Under their three-part “ABC” test, part B said no one could be an independent contractor to a company operating within the same industry. As a result, a plumber fixing the bathroom in a grocery store could be considered an independent contractor, but a truck driver leasing himself and his truck to a trucking company could not.

Independent contractors cannot be organized by labor unions because they are considered small businesses, but employees can be union members, so the ABC test has been embraced and supported by unions and their advocates among policymakers, such as Gonzalez Fletcher, who before she entered the state legislature was a union official.

Following the supreme court decision, business groups sought to pass legislation to overturn it. However, Gonzalez Fletcher hijacked their idea and introduced legislation to codify the high court ruling into state law, which later was passed quickly by California’s overwhelmingly Democrat state legislature.

Passage happened so quickly that although it included exceptions for certain professions (such as lawyers, of course), other freelance occupations like writing and computer programming would have been devastated. New legislation was passed adding exclusions after negotiations with other businesses that had more clout with the legislators than trucking and rideshare companies, who AB 5’s advocates routinely demonized in public.

In fact, federal judges in a recent decision attacked Gonzalez Fletcher’s role in getting the bill passed in ways that could endanger major parts of the legislation because she appears to have used the measure to specifically target named corporations, including Uber, Lyft and other individual delivery services, which is unconstitutional.

Also earlier this year Gonzalez Fletcher—who left the legislature in 2022 to become chief executive of the California Labor Federation of the AFL-CIO—became embroiled in a sex scandal involving her husband, former San Diego county supervisor Nathan Fletcher (D), as a result of accusations that she sought to intimidate the woman who is suing him for sexual harassment, including charges of physical assault.

At the end of March, Grecia Figueroa filed suit against Fletcher and her employer, the San Diego Metropolitan Transportation System (MTS), for sexual harassment, multiple acts of sexual assault and whistleblower retaliation. In addition to serving as a county supervisor, Fletcher had been chairman of the MTS board and Figueroa was abruptly fired without explanation from MTS on the same day Fletcher announced his candidacy for a state senate seat.

After the lawsuit was filed but not yet been made public, Fletcher and his attorney requested settlement negotiations. During those talks, Figueroa received a letter from Fletcher’s attorney stating that unless she dropped her suit, both Fletcher and his wife, Lorena Gonzalez Fletcher, would sue Figueroa and her attorney for pursuing attempted extortion, and she would be made to look terrible. The letter also stated that this accusation would follow Figueroa for the rest of her life.

Soon after Figueroa’s lawsuit became public, Fletcher resigned from his county supervisor position and also withdrew from his race to become a state senator, which he was favored to win earlier.

He also publicly admitted to having an extramarital affair with Figueroa but strongly asserted that it had been consensual. He promised to enter a rehabilitation program to deal with an alcohol abuse problem and Post-Traumatic Stress Disorder (PTSD) Fletcher said had developed as a result of his service in Iraq when he was in the Marines. He also publicly proclaimed his love for his wife and profusely apologized to her.

But he did not apologize to Figueroa, whose lawsuit alleges that Fletcher pursued her for a relationship on many occasions and made his affection for her known to her colleagues and superiors at MTS, which caused her professional embarrassment and she believes eventually led to her firing by the agency.

Courting Danger for AB 5

Gonzalez Fletcher’s habit of verbally attacking rideshare and delivery companies like Uber, Lyft and Postmates by name during deliberations on the original AB 5 measure has drawn condemnation from a three-judge panel of the Ninth Circuit U.S. Court of Appeals and could result in endangering major parts of the legislation.

The targeted firms are asserting because they were cited repeatedly by name during the legislative process, their rights and those of their drivers were violated because the legislation violates the Equal Protection Clause of the U.S. Constitution’s 14th Amendment. Under that clause, it is in most cases illegal to use the legislative process to target named individuals or organizations.

For years now, Gonzalez Fletcher and other union advocates seeking to organize these rideshare and delivery companies have demonized them publicly, accusing them of abusing their drivers as well as the safety of the public in the strongest possible language, something that is par for the course in union organizing campaigns, but which may have tainted AB 5’s genesis in the eyes of the court.

In its March 17 decision, the Ninth Circuit three-judge panel unanimously declared, “The desire to harm a politically unpopular group cannot constitute a legitimate governmental interest. Plaintiffs plausibly allege that the primary impetus or the enactment of AB 5 was the disfavor with which the architect of the legislation viewed Uber, Postmates and similar gig-based models.” 

The judges found that the rideshare companies bringing the suit were reasonable in suggesting that AB 5 had unfairly targeted drivers and companies such as Uber and Lyft. Specifically, the panel noted that a legislative desire to harm a politically unpopular group is not a legitimate governmental interest for creating a law like this one.

For example, the panel cited multiple public statements of AB 5’s sponsor—former Assemblywoman Gonzalez Fletcher—who singled out and publicly disparaged these companies by name, which was evidence that the legislation’s primary impetus may have been animus toward them, notes attorney Tony Oncidi of the Proskauer Rose law firm.

The judges also said the plaintiff companies plausibly alleged that they were singled out in that multiple companies and workers were able to lobby for and obtain carve outs from the strict provisions of the law, which they said was “starkly inconsistent” with AB 5’s stated purpose of protecting “workers’ basic rights,” Oncidi points out.

The judges also said the companies’ argument that they had been unfairly singled out was supported by later legislation granting exclusions from the law for a large number of favored workers who were able to secure later exclusions from the legislature. “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 judges said.

Subsequently, the California Trucking Association and Owner-Operator Independent Drivers Association amended their own separate lawsuit challenging AB 5 to include arguments derived from the Ninth Circuit three-judge panel decision.

In a separate development not directly involving Gonzalez Fletcher, a three-judge panel of the state’s Court of Appeal for the First District recently overturned the lower court decision that had invalidated Proposition 22, a public referendum approved by voters in 2020 that had briefly overturned AB 5 specifically in regard to Uber, Lyft, DoorDash and delivery drivers.

After the referendum was passed by California’s voters, a state court judge later ruled that the new law violated citizens’ constitutional rights under labor law and struck it down. Although California is well known for taking a fairly broad-based approach when it comes to public referenda, state law also dictates that referenda cannot be used to take away any of citizens’ constitutional rights.

The referendum had been mounted by the ride share companies who promoted it with a massive public relations and advertising campaign costing $205 million, which was estimated to be the largest amount of money ever spent on a referendum campaign in California.

In addition to allowing those drivers to continue working as independent contractors, the referendum added benefits for them that the companies would pay for, including occupational accident insurance and certain minimum revenue protection.

The proposition also required the companies to develop anti-discrimination and sexual harassment policies; and develop training programs for drivers related to driving, traffic and accident avoidance. In addition, it recognized and required reporting of sexual assault and misconduct; mandated zero-tolerance policies for driving under the influence of drugs or alcohol; and required that the companies conduct driver criminal background checks.

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