California Gov. Jerry Brown. Credit: Jason Doiy/ The Recorder

Gig companies and business groups are lobbying California Gov. Jerry Brown and lawmakers to quickly blunt the effects of an April ruling by the state Supreme Court that makes it tougher for employers to deny employee status to their workforce.

In a letter dated Aug. 6, dozens of companies and corporate trade groups pleaded with policymakers to “suspend or postpone the application of the Dynamex decision until all parties impacted by this decision can work together to develop a balanced test for determining independent contractor versus employee status that reflects the needs of California's economy and the workforce.”

Jennifer Barrera, senior vice president for policy at the California Chamber of Commerce, said the letter signers want the Legislature to pause the application of the Dynamex decision to anyone not involved in the case and to return to the so-called Borello worker classification test until it can draft a different solution.

“The time to act is now,” the letter continues, “before work opportunities are destroyed, and before the trial lawyers start crushing businesses with an onslaught of litigation.”

The letter's signatories include DoorDash Inc., Lyft Inc., Handy Technologies Inc., Instacart Inc., Postmates Inc., Uber Technologies Inc. and other platforms whose business models rely on fleets of independent contractors. The California Newspaper Publishers Association, of which The Recorder is a member, also signed on to the letter.

The letter attacks the unanimous ruling in Dynamex Operations West v. Superior Court, which created a more rigid, three-prong “ABC” test to decide whether a worker is an employee entitled to statutory protections such as overtime pay, minimum wage and meal-and-rest breaks.

“The court was limited in the information it considered in its opinion, but the Legislature is not,” the companies wrote. “Legislative discussions and hearings that invite all stakeholders … could better identify a test for independent contractor versus employee.”

The letter follows a separate one, first reported by Bloomberg LP, sent to the Brown administration on July 23, asking the governor to bar state agencies from implementing the high court's new worker classification test and to pursue legislation to eliminate it. That letter was signed by DoorDash, Handy, Instacart, Lyft, Postmates, Square Inc., TaskRabbit Inc. and Total System Services Inc.

“The internet industry is concerned about the implications of the Dynamex ruling and its potential to jeopardize internet-enabled freelance work,” said Mahsau Daee, spokeswoman for the Internet Association, which represents several of the companies that signed the July 23 letter.

The governor's office has not commented about the requests to intervene. This year's legislative session ends on Aug. 31, and any attempt to pass a Dynamex-focused bill by then would be a tough chore in a labor-friendly Legislature.

“The chamber [of commerce] and the business groups are in full-fledged panic mode,” said Barry Broad, a lobbyist and the former legislative counsel for the California Teamsters Public Affairs Council. “They want to make this ruling go away. But nobody in the Legislature is really interested in starting that.”

A coalition of labor groups sent its own letter to the governor and lawmakers last month, promising to oppose any attempt “to delay or alter” the Dynamex ruling.

After the Dynamex ruling was issued, business groups asked the state Supreme Court to clarify that its decision was not retroactive. Justices declined to issue any clarification. Plaintiffs lawyers hailed an Orange County Superior Court ruling in July that said the Dynamex test could be applied retroactively to a wage-claim case involving exotic dancers and the Anaheim-based company Imperial Showgirls.

Shannon Liss-Riordan of Lichten & Liss-Riordan, who has pursued a number of a misclassification suits against gig companies, sued Lyft and Postmates in May on behalf of workers, citing the Dynamex criteria. Liss-Riordan has also asked the U.S. Court of Appeals for the Ninth Circuit in May to return an unsuccessful worker classification complaint against GrubHub Inc. to the trial court in light of the Dynamex ruling.

 

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