In her first week as Acting Labor Secretary, Julie Su saw her landmark pro-union boss legislation take two steps backward in California.
A state appeals court in California last week reversed a lower court ruling which had attempted to gut Proposition 22, a ballot measure passed by voters in 2020 to affirm that app-based rideshare and delivery drivers are independent contractors. Proposition 22 was introduced in response to the passage of California Assembly Bill 5 (AB5), which sought to force independent contractors across many industries to reclassify as W-2 employees based on a vague three-factor “ABC test.”
The ruling by the 1st District Court of Appeal declared that “Proposition 22 does not intrude on the Legislature’s workers’ compensation authority or violate the single-subject rule,” contradicting the lower court’s assessment that the ballot measure was unconstitutional. While the ruling is expected to be appealed to the California Supreme Court by the Service Employees International Union (SEIU), last week’s decision represents a positive step for worker freedom in the state.
“The court’s decision is a huge victory for Dashers who use our platform to earn when, where, and how it works for them and in a way that fits their lifestyle,” DoorDash said in a statement reacting to the ruling.
On Friday, California drivers received another victory in the courtroom, this time from the U.S. Ninth Circuit Court of Appeals. The three-judge panel decided unanimously to reinstate a challenge of AB5 brought by Uber, Postmates, and one of their drivers. The plaintiffs allege that AB5 unfairly discriminates against the app-based rideshare and delivery industries to which they belong, with Uber arguing that California’s government was targeting individual companies “like a heat-seeking missile.”
“Plaintiffs plausibly alleged that A.B. 5, as amended, violated the Equal Protection Clause for those engaged in app-based ride-hailing and delivery services. Thus, Plaintiffs plausibly alleged that the primary impetus for the enactment of A.B. 5 was the disfavor with which the architect of the legislation viewed Uber, Postmates, and similar gig-based business models,” wrote the Ninth Circuit in its decision.
“Just a few days after Prop 22 was upheld, the Ninth Circuit has agreed that AB5 unfairly targeted platforms like Uber, out of ‘animus rather than reason,’” said Uber in a statement following the ruling. “This is yet another signal that efforts to take away drivers’ independence and flexibility will ultimately fail—because it’s simply not what drivers want.”
Indeed, AB5 is highly unpopular, particularly among the workers it seeks to regulate. In polling, nine-in-ten freelancers in California opposed the law. Voters approved Proposition 22 to provide exemptions for app-based drivers by a 17-point margin, a measure that was supported by three-quarters of the drivers themselves.
Despite the legal challenges, widespread unpopularity, and economic fallout from AB5, President Biden selected Julie Su, a key architect behind the law, as his nominee to be the next U.S. Secretary of Labor. As the head of California’s Labor and Workforce Development Agency, Su was an aggressive enforcer of AB5, emphasizing her eagerness to push for “investigations and audits” and issue “citations… and other kinds of penalties” under the radical law.
Taxpayers would pay the price if Su’s labor agenda is allowed to go national. A study commissioned by Americans for Tax Reform and the Tholos Foundation last year found that if Su’s ABC test were applied on a nationwide basis, 56 percent of the independent contractors who would be forced into W-2 employment status would pay higher taxes. Ninety-six percent of those workers who will have a higher tax burden––about 7.5 million workers––make less than $400,000 per year, once again violating Biden’s pledge to not raise taxes on anyone earning less than that amount.
From ballot initiatives to court rulings, Californians are rejecting Julie Su’s radical restrictions on the rights of independent contractors. Lawmakers should follow suit and reject her nomination for Labor Secretary.