Federal Judge Denies Ride Share and Delivery Companies’ Request for Preliminary Injunction to Enjoin Enforcement of California’s Controversial New Independent Contractor Test
As we recently wrote here, Uber and Postmates (and two of their drivers) to file an eleventh-hour lawsuit seeking to enjoin the enforcement of California’s controversial new independent contractor law – known as AB 5 – against them.
In a significant blow to the companies’ challenge to the new law, the court has denied Uber and Postmates’ request for a preliminary injunction to block the enforcement of AB 5 against them.
In denying the request for a preliminary injunction, the court concluded that Uber and Postmates were not likely to succeed on the merits of their various constitutional challenges to the statute, and that they had failed to demonstrate that they would suffer irreparable harm.
The court found that the companies had offered no evidence showing that the Legislature could not have reasonably conceived that AB 5 would further the state’s interest in reducing the misclassification of workers as independent contractors such that they were likely to succeed on their equal protection clause challenge. And the court rejected the argument that there is no rational basis for AB 5’s exemptions, under which an individual who directly sells products is exempted from the scope of AB 5, while an individual who earns income by offering driving services is not. In considering the rationale for AB 5’s exemptions, the court found that exempted workers, such as direct salespersons, exert independence and control in performing their jobs.
The court also rejected the companies’ argument that AB 5 deprives gig economy workers of the right to pursue their chosen occupation.
The ruling does not signal the end of the case, or of Uber, Postmates and other companies’ challenges to AB 5. Should they not succeed in the trial court, an appeal is likely. But perhaps more importantly, ride-share and delivery companies have reportedly earmarked more than $110 million to a campaign to have California voters exclude them from application of AB 5 in a referendum to take place later this year.