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Applying the Policy Behind AB 5, a San Diego Court Has Enjoined a Company from Failing to Comply with California Employment Law with Respect to its Classification of Individuals as Independent Contractors

While litigation over the controversial Assembly Bill 5 (AB 5) continues throughout the state, a San Diego Superior Court judge recently issued a preliminary injunction enjoining and restraining a company from failing “to comply with California employment law” regarding a category of individuals within the City of San Diego while the litigation is pending. This decision is noteworthy because it appears to require the company to immediately reclassify its independent contractors as employees, despite the fact the Court has not yet ruled on the merits of the City’s claim.

The case was brought by the City Attorney of San Diego against Maplebear, Inc. doing business as InstaCart, a same-day grocery delivery company. The lawsuit asserts a cause of action for Unfair Competition under California’s Business and Professions Code in which the City claims that Instacart “maintains an unfair competitive advantage by misclassifying workers” who provide shopping services as independent contractors instead of employees.

In the Order issued by the Honorable Timothy Taylor, he notes that the probability of one side prevailing is “not free from doubt.” On the other hand, he writes that the City will “more likely than not” be able to establish that Instacart Shoppers “perform a core function” of the business; are not free of control, and are not engaged in an independently established trade, occupation, or business. The Court also points out that while the City has the burden going forward with evidence, Instacart has the burden of establishing proper classification.

Judge Taylor’s Order goes on to note, “[t]he policy of California is unapologetically pro-employee (in the several senses of that word). Dynamex [the case that spawned AB 5] is explicitly in line with that policy. While there is room for debate on the wisdom of this policy, and while other states have chosen another course, it is noteworthy that all three branches of California have now spoken on this issue.” An attitude that is likely to be reiterated again and again as businesses grapple with the fallout from Dynamex and AB 5.

After issuance of Judge Taylor’s Order granting the City’s request for a preliminary injunction, Instacart moved on an ex parte basis to confirm that the preliminary injunction is subject to an automatic stay pending appeal, to stay enforcement of the preliminary injunction pending appeal or, in the alternative, to dissolve the preliminary injunction altogether. Judge Taylor denied Instacart’s ex parte application and the Company has since filed an appeal.

Jackson Lewis P.C. © 2020National Law Review, Volume X, Number 59

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About this Author

David G. Hoiles Jr., Jackson Lewis, Office Managing Principal, Employment Lawyer, Misappropriations Attorney
Office Managing Principal

David G. Hoiles, Jr. is Office Managing Principal of the San Diego, California office of Jackson Lewis P.C. Mr. Hoiles worked in the Los Angeles, California office of Jackson Lewis for 12 years before relocating to San Diego in July of 2014.

Mr. Hoiles represents employers and individual defendants in all types of employment litigation, including the defense of claims of sexual harassment, unlawful employment discrimination and retaliation, failure to provide reasonable accommodations, breach of contract, intentional tort,...

619-573-4919
Emilia A. Arutunian Employment lawyer Jackson Lewis
Associate

Emilia A. Arutunian is an Associate in the San Diego, California, office of Jackson Lewis P.C. Her practice focuses on representing employers in workplace law matters, including preventive advice and counseling.

While attending law school, Ms. Arutunian completed an externship with the Honorable Larry Alan Burns, the Chief United States District Judge of the United States District Court for the Southern District of California.

Ms. Arutunian is an active member of the American Bar Association Rule of Law Initiative, an organization which works to promote justice and economic opportunity in the country of Armenia. She is also a board member of Frederich’s Ataxia Movement, an organization dedicated to fundraising and raising awareness to support scientific research for Frederich’s Ataxia. Ms. Arutunian is also a board member of the San Diego Branch of the Society for Armenian Orphaned Relief, an international organization whose mission is to raise funds to provide humanitarian relief to orphaned Armenian children and adults and disabilities throughout the world.

619-573-4900