Assembly Bill 5 (“AB 5”), feared by some to be the death of independent contractor relationships in California, faces a growing number of lawsuits.  Organizations representing three industries have filed lawsuits challenging the bill on constitutional grounds.  In each lawsuit, the plaintiffs have sought a preliminary injunction to stay enforcement of the bill until the trial court makes a final decision.  These efforts have met with mixed success.

Legal Challenges

AB 5 is already facing three major lawsuits.  Challengers will likely file additional lawsuits in the coming months.

On October 25, 2018, the California Trucking Association (“CTA”) filed suit in the US District Court for the Southern District of California.  CTA alleges AB 5 is preempted by the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”).  On December 24, 2019, CTA filed a motion for a temporary restraining order against enforcement of AB 5 as to any motor carrier operating in California.  The court granted the motion on December 31, 2019.  The state has appealed the ruling.

The American Society of Journalists and Authors (“ASJA”) filed a lawsuit on December 17, 2019, in the US District Court for the Central District of California.  The suit challenges the application of AB 5 to journalists and authors on various constitutional grounds.  On December 31, 2019, ASJA filed an ex-parte application for a temporary restraining order barring enforcement of AB 5 pending the outcome of the case.  The court denied the ex-parte application (without prejudice) and set the issue for a formal motion, with a hearing date of March 9, 2020.

Contractors working with various gig economy leaders filed suit on December 30, 2019, also in the Central District of California.  The plaintiffs allege AB 5 violates ten provisions of the United States and California-State constitutions.  On January 8, 2020, the plaintiffs filed a motion for a preliminary injunction.  The court denied the motion on February 10, 2020.

Legislation

Less than two months into the legislative session, legislators are already moving forward with at least eight bills related to AB 5.  Most of these efforts are calculated to amend AB 5 to alleviate the damage it will cause to specific industries and occupations.  These bills include:

• AB 1850 (Gonzalez). At present, this bill simply declares “the intent of the Legislature to enact legislation that would further clarify the application of the California Supreme Court’s decision in Dynamex and recently-enacted requirements under the Labor Code.”  However, Assemblymember Gonzalez will very likely amend the bill during the coming months.

• AB 1925 (Obernolte) would amend Labor Code section 2750.3 (“section 2750.3”) to add an exemption to AB 5 for small businesses.

• AB 1928 (Kiley / Melendez) would repeal AB 5 entirely and codify the Borello test for all purposes.

• SB 806 (Grove) would make various minor revisions to section 2750.3. Currently, none of those revisions are substantive.  However, this bill will likely be amended to include substantive provisions.

• SB 867 (Bates) would amend section 2750.3(b)(7)(B) to eliminate the sunset date (1/1/21) on the exemption for newspaper carriers.

• SB 868 (Bates) Amends section 2750.3(c)(2)(B)(x) to remove the 35-submission limit from the existing exemption for freelance writers, editors, or newspaper cartoonists.

• SB 875 (Jones) would amend section 2750.3(c)(2)(B) to add an exemption for interpreters and translators.

• SB 881 (Jones) would amend section 2750.3(c)(2)(B) to add an exemption for “A person providing services as a musician or music industry professional, except where a collective bargaining agreement applies.”

Additional bills will be forthcoming during the legislative session.

While some attempts to fight against AB 5 seem more promising than others, it is only the start of the year.