Companies Fighting Back Against AB5

by | Nov 1, 2019 | Business Litigation |

California’s recent passage of AB 5 has caused waves across the state’s employment market. However, the passage of the bill is clearly not the final word. There are likely legal challenges to come and, beyond this, the companies most directly targeted by the bill are already fighting back.

One step in the fight was taken by Uber, Lyft, and DoorDash with a $90 million effort for a ballot measure to exempt them from the legislation. The ballot measure had been discussed prior to AB 5’s passage but is now taking shape with the law set to go into effect.

The Ballot Measure is called the Protect App-Based Drivers and Services Act and would be voted on in California in November 2020. Likely in an effort to get the ballot through, the measure does provide some increased value to workers for the companies. This will include a guarantee that drivers make 20% more than minimum wage and a health care stipend for drivers working over 15 hours per week. However, the ballot measure was swiftly attacked by the California Labor Federation criticizing it as rich corporations looking to play by their own rules.

Approximately a year from possibly being put to a vote, it’s unclear how successful the measure will be, but it’s certainly a risky swing from these companies looking to prevent their business model from being deemed illegal. In success or failure, it’s certain that other industries and companies will have their eyes on this effort and whether it is something that can be used, either through a similar initiative or to convince legislators that AB 5 needs to be modified and softened.

California is in the midst of a huge battle over the future of employment. It is more important than ever for employers to have experienced employment and transportation lawyers on their side to navigate changes and make sure they comply with the new law and avoid being hit with potentially devastating lawsuits.

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