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Industry Insights

Young: Bark or Bite?

  • State: California

One of the latest turns in the tussle over Assembly Bill 5 between California policymakers and Uber and Lyft is the action of the California Public Utilities Commission.

Julius Young

Julius Young

On June 2, Doug Ito, director of the PUC’s Consumer Protection and Enforcement Division, issued a warning to transportation network companies that they must carry California workers’ comp insurance or a certificate of self-insurance. 

The companies were warned that AB 5 applies and that “PU Code Section 5378 authorizes the commission to cancel, revoke or suspend a carrier’s operating authority, and to fine a carrier, for violation of the Passenger Charter-Party Carriers Act, which commences with PU Code Section 5351.”

The PUC position was reiterated in a June 9 rulemaking order by PUC commissioner Genevieve Shiroma, a Newsom appointee.

That PUC order states that:

AB 5 was signed into law by Gov. Newsom on Sept. 18, 2019, and became effective on Jan. 1, 2020. AB 5 modified the California Labor Code to direct that a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all the following conditions are satisfied:

  1. The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
  2. The person performs work that is outside the usual course of the hiring entity’s business.
  3. The person is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.

ALJ Robert Mason, assigned to this proceeding, issued a ruling on Dec. 19, 2019, asking for briefing on the applicability of the AB 5 criteria on TNCs. In response, the TNCs argued that their drivers met the criteria to be considered independent contractors. Others argued they do not and drivers are employees.

On May 5, 2020, the California attorney general, along with the city attorneys for Los Angeles , San Diego and San Francisco, filed suit in Superior Court of the State of California, County of San Francisco, and are seeking injunctive relief, restitution and penalties against Uber and Lyft for allegedly misclassifying their TNC drivers as independent contractors.

Uber has filed a lawsuit in federal court for injunctive relief to enjoin the enforcement of AB 5 against it and its drivers.

Lyft drivers have sued Lyft in federal court seeking an order requiring Lyft to reclassify all of its drivers in California from independent contractor to employee.

Further, Uber and Lyft have successfully placed on the November 2020 ballot a measure that would exclude all app-based drivers from AB 5.

The presence of these lawsuits and ballot measure does not mean that the Commission can abdicate its regulatory responsibility over TNCs. As a matter of California constitutional law, the commission is tasked with enforcing those laws applicable to the entities subject to its jurisdiction until such time as a higher court, the Legislature or the public through their right to vote, determine otherwise.

Thus, for now, TNC drivers are presumed to be employees and the commission must ensure that TNCs comply with those requirements that are applicable to the employees of an entity subject to the commission’s jurisdiction.

Will the ride-hailing companies come into compliance by providing proof or workers’ comp insurance or self-insurance?

No way.

They’ll probably appeal any enforcement action by the PUC.

Meanwhile, the companies are pushing an appeal at the 9th Circuit U.S. Court of Appeals, challenging the ruling of U.S. District Court Judge Dolly Gee, which denied a request for a preliminary injunction against AB 5.

But the real action is probably in the court of public opinion.

Uber and Lyft are banking on winning the November initiative that would repeal AB 5. Anyone stuck at home watching a lot of TV is seeing a large volume of ads pushing their initiative.

While this blog was being written I saw two ads financed by the gig worker platforms, one featuring a young black student driving to make ends meet during his college studies, another featuring a young Korean woman trying to keep her finances afloat.

This will be a barnburner.

Julius Young is a claimants' attorney for the Boxer & Gerson law firm in Oakland. This column was reprinted with his permission from his blog,

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