Calif. Calls For Misclassified Worker Benefits Rise Over Virus

Law360 (March 19, 2020, 4:25 PM EDT) -- As the coronavirus continues to ravage California, the lead lawmaker behind the state’s recent worker classification reform has called on regulators to let misclassified workers collect unemployment, and the cities of Oakland and Los Angeles have urged the Ninth Circuit to reapply the law to truckers.

Assemblywoman Lorena Gonzalez, D-District 80, on Wednesday urged the Employment Development Department of the state’s Labor and Workforce Development Agency to “immediately provide” unemployment benefits to workers misclassified as independent contractors under the new “ABC test” imposed by Assembly Bill 5. Workers classified as employees can collect unemployment when they lose their jobs, but contractors can’t.

“I authored AB 5 precisely for the moment we are in now,” Assemblywoman Gonzalez said, citing rampant job losses as the virus forces business shutdowns. “These Californians need our help, and EDD has the authority and legal framework to aggressively address misclassification and provide these workers with the benefits they deserve.”

Assemblywoman Gonzalez’s letter comes the same day the Los Angeles and Oakland city attorneys cited “the current public health crisis” in an amicus brief urging the Ninth Circuit to lift an injunction blocking AB5’s application to truck owner-operators, who own their own trucks but transport goods for others.

Because misclassified workers don’t have benefits or the sizeable independent incomes to cover their own care, “they are less likely to be able to ensure adequate care during the current pandemic and are more likely to be forced to work despite illness — with plain consequences to themselves and public health,” the attorneys told the Ninth Circuit.

Along with the California Labor Federation, a union coalition, the city attorneys are backing a bid by the state attorney general and the International Brotherhood of Teamsters to reverse a California federal court decision blocking AB5’s application to truckers because of an apparent conflict with federal law. AB5, which took effect at the beginning of this year, makes it harder for employers to classify workers as contractors by making them prove each of three things to do so, including that the worker performs work outside the employer’s main business.

Experts say this prong of the ABC test ropes in many workers often classified as independent contractors, including workers for gig economy platform companies and truck owner-operators who answer to single companies. But many such businesses have not reclassified their workers as employees, the trucking companies with the Southern District of California’s blessing.

In an order granting the California Trucking Association an injunction, that court said AB5 should not apply to truck owner-operators because it’s preempted by the Federal Aviation Administration Authorization Act of 1994, which bars states from regulating the “price, route or service of any motor carrier.” Because worker classification affects these things, AB5 must be partially blocked, the court said.

But the law is not preempted because it does not block trucking companies from using independent contractors, the city attorneys said. Rather, “its purpose is to allow the use of independent contractors while preventing the misclassification of individuals who are in fact employees,” they argued.

“All AB5 requires is that, to be classified as independent contractors, drivers operate legitimate independent businesses,” the attorneys said.

Oakland City Attorney Barbara Parker said Thursday her office filed the brief to "ensure that workers are classified correctly so that they receive the benefits they are entitled to under California law.”

"Our current public health crisis underscores how important it is that all workers receive benefits like sick leave pay and minimum wages so that they can take care of themselves and their families," she said. 

In its brief, the labor federation argued AB5 should apply to truckers because the law affects state laws on unemployment, areas of occupational safety and health not occupied by federal law, and workers’ compensation, all of which the federal government left up to the states.

“A closer examination of some of the laws affected by AB 5 demonstrates that preemption under the FAAAA could never have been contemplated by deregulation,” the federation argued.

Labor attorney David Rosenfeld, who represents the labor federation, said the brief attempts to "point out that if you look to certain of the laws that are affected by AB5, the Federal Aviation Administration Authorization Act ... couldn't preempt them because they're governed by other federal laws."

"The Ninth Circuit is going to swiftly reverse the district court and say you've got to analyze this statute by statute," he said. 

A state representative declined to comment Thursday. Representatives for the California Trucking Association and the Teamsters did not immediately provide comment.

The city attorneys are represented by Danielle Goldstein, Michael Feuer, Kathleen Kenealy, Michael Bostrom and Christopher Munsey of the Los Angeles City Attorney’s Office, and Barbara Parker, Maria Bee, Erin Bernstein, Malia McPherson, Caroline Wilson and Nicholas DeFiesta of the Oakland City Attorney’s Office.

The labor federation is represented by David Rosenfeld of Weinberg Roger & Rosenfeld PC.

The trucking association is represented by Robert Roginson and Alexander Chemers of Ogletree Deakins Nash Smoak & Stewart PC, and Miriam Nemetz, Evan Tager and Andrew Tauber of Mayer Brown LLP.

The state is represented by Xavier Becerra, Thomas Patterson, Tamar Pachter and Jose Zelidon-Zepeda of the California Office of the Attorney General.

The Teamsters are represented by Stacey Leyton and Andrew Kushner of Altshuler Berzon LLP.

The case is California Trucking Association et al. v. Xavier Becerra et al., case numbers 20-55106 and 20-55107, in the U.S. Court of Appeals for the Ninth Circuit.

--Additional reporting by Linda Chiem and Lauren Berg. Editing by Jack Karp.

Update: This story has been updated with comment from the Oakland city attorney. 

For a reprint of this article, please contact reprints@law360.com.

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