©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 397 granting the preliminary injunction. The trial court had focused on the companies’ inability to meet Prong B: whether their drivers perform work outside the usual course of defendants’ businesses. The trial court found that despite attempts to characterize the drivers as the ride-share companies’ “customers,” for whom the ride-share companies provide the service of matching drivers with passengers, the People’s eventual success on the merits was almost “inevitable.” The trial court acted within its discretion in concluding that rectifying the various forms of irreparable harm shown by the People would more strongly serve the public interest than protecting the ride-share companies, their shareholders, and all those who had come to rely on the advantages of on-line ride-sharing delivered by a business model that does not provide employment benefits to drivers.40 Prop 22. But then the actual people of California spoke. The voters in November 2020 overwhelmingly passed Proposition 22, the Protect App-Based Drivers and Services Act.41 Proposition 22 classifies certain app-based ridesharing and delivery drivers as independent contractors, provided they (i) maintain control over their schedules, (ii) need not accept a particular “gig,” and (iii) are not restricted from performing services for multiple companies (except during their engaged time). Proposition 22 also entitles app-based drivers to certain benefits, such as a minimum compensation, per-mile compensation, and a health care subsidy (for drivers who average 25 hours per week of engaged time in a calendar quarter). Proposition 22 has tempered litigation attacking the classification of app-based drivers.42 Nevertheless, there remain a number of pending independent contractor misclassification cases where drivers’ employee status will still be litigated under the ABC test for the time period pre-dating the enactment of Proposition 22. While gig companies have argued that Proposition 22 abates AB 5 for the period prior to its passage, the Ninth Circuit recently rejected that argument in Lawson v. GrubHub.43 Prop 22 remains vulnerable to further judicial challenge. In 2021, an Alameda Superior Court in Castellanos v. State of California held that Proposition 22 was unconstitutional because it limits the ability of a future legislature to define gig workers’ employment status. The decision was appealed, and on March 13, 2022, a California Court of Appeal disagreed with the lower court’s decision that Proposition 22 was unconstitutional on the whole. It struck down part of Proposition 22, finding that “the initiative’s definition of what constitutes an amendment violates separation of powers principles.” However, because “the unconstitutional provisions can be severed from the rest of the initiative, we affirm the judgment insofar as it declares those provisions invalid and to the extent the trial court retained jurisdiction to consider an award of attorney's fees, and otherwise reverse.”44 Further appeals are expected, but for now Proposition 22 provides a powerful carveout for certain app-based workers who are defined by statute as independent contactors. Exemptions from the ABC test. The enactment of AB 5 was a business bonanza for legislative lobbyists. The law granted many exemptions from the ABC test—both as to AB 5 and as to the holding in Dynamex—for specified industries and occupations.45 This Sacramento lobbying gravy train continued well into 2020, culminating in the passage of AB 2257, which repealed and replaced AB 5 while adding exemptions from the ABC test. Where an exemption applies, a business can continue to defend its classification of a contractor by attempting to rely on the common law test for employment set forth in the California Supreme Court’s 1989 Borello decision.46 One broad, vaguely worded statutory exemption is a “business to business” exemption that applies to “business service providers” contracting to provide services to another business, provided that certain criteria are met.47 Other exemptions address “service providers” in certain fields, including graphic design, photography, tutoring, event planning, moving, home cleaning, pool and yard cleanup, animal services, web design, and dog grooming and walking, provided certain criteria are met. AB 5 also exempts “professional services” contracts, covering occupations such as marketing, human resources administration, travel agents, graphic designers, grant writers, fine artists, agents licensed to practice before the IRS, payment processing agents, photographers and photojournalists, freelance writers, editors or cartoonists,
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