AB 5 Update: Judge Declines to Rule Uber Drivers Are Employees

LOS ANGELES — The newest data point in XBIZ’s ongoing coverage of California’s AB 5 initiative comes from U.S. District Judge Edward Chen, who has declined to compel Uber to reclassify its drivers in California as employees.

Courthouse News Service has reported that the move seems to come down to a discrepancy over whether or not a sought after injunction should be treated as being public or private — and is likely to not be the last word on Uber’s driver classification.

It is a saga studied by the industry as it seeks to steer clear of liability while continuing to make use of independent contractors, ranging from performers to programmers, cammers to consultants and everything in between that live in California or provide services to California businesses.

Uber plans to continue classifying drivers as contractors, claiming they are not employees under California’s “ABC Test” and is fighting to overturn the law, which many observers see as yet another state cash-grab pushed by labor unions. If it cannot win, Uber may be liable for driver’s job expenses, including gas, insurance, maintenance and phone plans.

On the flip side, the law’s supporters claim that many employees are mislabeled as contractors to save their employers money on taxes and benefits while depriving these workers of their rights under state law, such as a minimum wage, plus overtime and sick pay, workers’ compensation insurance and more.

Labor rights attorney Shannon Liss-Riordan believes that worker misclassification is “a significant factor in the erosion of the middle class and the rise in income inequality.”

“While the court declined to grant our request for injunctive relief on a preliminary basis, the court left open the possibility that we may obtain injunctive relief on a permanent basis later in the case,” Liss-Riordan told Courthouse News Service. “So, we look forward to proceeding with the case and at last requiring Uber to comply with California law and stop depriving its drivers of their basic rights under the California Labor Code.”

Stay tuned to XBIZ for the newest updates on AB 5 and what it means for the future of your business.

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