October 20, 2021

Volume XI, Number 293

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October 19, 2021

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October 18, 2021

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Court Rules "Independent Contractor" Prop 22 is Unconstitutional

On Friday, a California Superior Court judge held that California's Proposition 22--which allowed certain "gig economy" workers to be classified as independent contractors--is unconstitutional.

California voters passed the Proposition last November with an overwhelming majority, signaling their agreement with companies like Uber, Lyft, and DoorDash, that gig workers should be allowed to be classified as independent contractors rather than full employees. The ruling is the latest turn in a lengthy and expensive fight between gig-economy giants and the state of California.

California lawmakers, with the support of employee unions, have long pushed for independent contractors to be reclassified as employees. The state argues that employees receive greater benefits and protections from employment status, and that the workers often face no real choice of working status. Those who favor allowing the business and the worker to decide their own business relationship point out that the state is able to gather payroll taxes like social security and disability insurance from employees, but does not receive such up-front payments from independent contractors.

Ultimately, this ruling (which will be appealed) means the dust is not yet settled on the independent contractor fight. For most employers, however, the "gig economy" focus of Prop 22 meant that most independent contractor classifications would need to be reviewed and revised for legal compliance irrespective of Prop 22. For the gig economy, the fight continues.  

“We believe the judge made a serious error by ignoring a century’s worth of case law requiring the courts to guard the voters’ right of initiative,” said Geoff Vetter, a spokesman for the companies’ Proposition 22 campaign. “This outrageous decision is an affront to the overwhelming majority of California voters.”

 

©1994-2021 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume XI, Number 236
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About this Author

Paul Huston, Mintz Levin, Wage & Hour Employment Litigation & Arbitration Discrimination & Harassment Employee Mobility & Trade Secrets Employment Counseling and Training Complex Commercial Litigation
Attorney

Paul Huston is an attorney in the firm’s employment labor and benefits practice group. His practice focuses on labor and employment litigation and general commercial litigation. Paul has a wide range of experience handling both single plaintiff and class action lawsuits, covering issues from wrongful termination, sexual harassment, and disability discrimination, to wage and hour class actions involving thousands of class members. Paul also has significant experience in contract formation and defense, including independent contractor agreements, arbitration agreements,...

858-314-1549
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