March 9, 2020 AGTA ConferenceTHE FUTURE OF GROUND TRANSPORTATION LABOR

PAUL MARRON, ESQ.MARRON LAWYERS, APC5000 E . SPRING ST. , SUITE 580LONG BEACH, CA 90815(562 ) 432 -7422PMARRON@MARRONLAW.COM

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Paul Marron is the Founder & Principal of Marron Lawyers. Mr. Marron has grown the Firm from a solo practice to a litigation and outside general counsel firm dedicated to excellence and winning for clients. Mr. Marron has tried 35 cases to jury verdict and 30+ to judges,

administrative tribunals and arbitrators. For plaintiffs, he has secured multiple judgments after trial of over $1M. For defendants, he has secured complete defense verdicts in trials

where plaintiffs sought as much as 8-figure judgments. Mr. Marron’s career includes numerous wins in bet-the-company cases. A judge described Mr. Marron as “among the finest litigators I’ve had in court,” while clients describe him as a “legal sharpshooter.” Recently, Mr. Marron secured a finding of “independent contractor” status and a $1.1M+ judgment against

the California Employment Development Department (EDD) in a 4.5 month trial in which EDD sought to re-classify 1500 independent contractors as employees and dismantle his

client’s business model.

Contact: pmarron@marronlaw.comwww.marronlaw.com

(562) 432-7422

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CONFIDENTIALITYThis presentation is only for members of AGTA and includes advice and discussion focused on the legal interests of the AGTA industry.It is to be used only by members of the AGTA community.Those who do not fit the above criterion and by intention or inadvertence receive a copy of this power point and/or audio recording are not authorized to review, use or disseminate it.

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OVERVIEW: ØCalifornia Assembly Bill 5 (AB 5).ØAssembly Bill 51 (AB 51) – Provision and Injunction.

ØThe effect of the retroactive decision Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 on independent contractors.oVazquez impact --- Retroactively Changed the Rules for Franchisors.

ØDoes preliminary injunction prohibit enforcement of AB 5?oAB 5 Injunction for Motor Carriers – Implications for Ground Transport.

ØAB 5 – Is it a threat to the independent contractor model in the ground transportation industry?

ØThe Protect App-Based Drivers Act.

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California Assembly Bill 5(AB 5)

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California Assembly Bill 5 (AB 5)

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Worker status: employees or independent contractors

The current Governor of California, Gavin Newsom, signed into law Assembly Bill 5, effective January 1, 2020—sweeping legislation that requires most “gig economy” workers to be treated as employees. AB 5 codifies the California Supreme Court’s 2018 ruling in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex). Dynamex creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission.The law requires a three-factor “ABC test” to decide a worker’s status as an independent contractor.

Under ABC test, the hiring entity has the burden to prove that a worker is an independent contractor by establishing that:

◦ (A) the worker is free from the control of the employer; ◦ (B) performs work that is not central to the employer; and ◦ (C) has an independent business of the same nature.

Under AB 5, an entity must classify workers as employees if it exerts control over how the workers perform their duties, or if their work is part of a company’s regular business. In addition, under AB 5, such workers classified as employees must also be afforded workers’ compensation in the event of an industrial injury, unemployment and disability insurance, paid sick days and family leave.

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Impact of AB 5 in the industry that relies on independent contractors in CAØBurden on employers to classify a worker’s status. ØDifficult to legally classify workers as independent contractors. ØRequirement to assess and restructure operating business models. ØWorkers may not prefer to work on a status-quo basis.ØWorkers may be forced to make changes or seek other employment opportunities. ØForced reduction of workforce.ØIncreased lawsuits to change work status/reclassification. ØAB 5 curtails the freedom of Californians to earn income when, where, and how they want as independent contractors.ØRestricts accessing work on app-based rideshare and delivery network platforms forcing the drivers to rigid employment schedules against their preference.ØEliminates hundreds of thousands of work opportunities, including part-time flexible employment, multiple jobs etc.

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ØIncreases challenges and burdens on companies when contractors are required to incorporate and adopt another status such as an employee of their own corporation.

ØExtends the reach of AB 5 to numerous additional CA employment laws beyond CA wage laws (e.g., workers’ compensation, paid sick leave, unemployment and other protections under the California Labor Code).

ØImpacts companies’ ability to retain, attract, sustain, and preserve manpower.

ØThreatens on-demand services, forced classification as employees, forcing shifts, limiting earnings, eliminating the opportunity to earn.

ØIncreases formation of new corporations and limited liability companies as AB 5 exempts businesses providing services to other businesses under certain conditions.

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AB 5 Exemptions to Specified OccupationsAB 5 exempts specified occupations from the application of ABC test. These exemptions include, but are not limited to: Ølicensed insurance agents Øcertain licensed health care professionals; Øregistered securities broker-dealers or investment advisers; Øreal estate licensees; Øcommercial fishermen; Øworkers providing licensed barber or cosmetology services

Ølicensed professionals (Lawyers, architects, engineers); others performing work under a contract for professional services, with another business entity, or pursuant to a subcontract in the construction industry;

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ØDirect sales salespersons;

ØFreelance writers, photographers;

ØTutors

The long list of exemptions suggests the legislature is aware that many industries benefit from utilizing independent contractors.

Note: The Borello test (S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341) will still apply to companies that are exempt from AB5.

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The impact of the retroactive Dynamex decision

In Gonzales v. San Gabriel Transit, Inc., et al., (2019) 40 Cal.App.5th 1131, the court concluded that the “ABC test adopted in Dynamex is retroactively applicable to pending litigation” asserting wage order violations and Labor Code violations based on wage orders.

Thus, until a decision is rendered by the California Supreme Court on the retroactive application of Dynamex, the Gonzales decision should be the binding authority.

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Vazquez v. Jan-Pro Franchising2019 WL 1945001, 9th Circuit, May 2, 2019

Three-tiered franchising model common in janitorial industry.

Franchisor/Regional Master Franchisees/Unit Franchisees.

Originally determined Dynamex ABC Test applies retroactively.

Follows General Rule: Statutes are given prospective affect and judge made rules are given retroactive affect. Holding is clarification rather than departure from existing law.

The decision was subsequently vacated in July and the 9th Circuit has sought guidance from the California Supreme Court.

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Vazquez Reinstated - September 2019

The 9th Circuit reinstated its opinion on September 24, 2019, holding the ABC test to be retroactively applied to the franchisor-franchisee relationship consistent with federal due process. The California Supreme Court’s special protections to franchising in Patterson v. Domino's Pizza, LLC, 60 Cal. 4th 474 (Cal. 2014) was found misplaced holding that the franchise context does not alter Dynamex analysis. And unlike Dynamex, Patterson was found to be limited to vicarious liability claims and not applicable to wage orders.

In Patterson, the Supreme Court of California held the franchisor-franchisee relationship is different than other employer-employee relationships.

The Vazquez opinion curtails franchisor’s right to license trademarks and to maintain existing long-term commercial relationships by continuing to sell franchises without incurring the unintended liabilities of employers.

Current StatusThe Southern District of California Issues Preliminary Injunction Enjoining Enforcement of AB 5 Against Motor CarriersØIn Cal. Trucking Ass'n v. Becerra, No. 3:18-cv-02458-BEN-BLM, 2020 U.S. Dist. LEXIS 7707 (S.D. Cal. Jan. 16, 2020), Judge Roger T. Benitez recently granted a preliminary injunction prohibiting enforcement of AB 5 on motor carriers. ØThe preliminary injunction extends the temporary restraining order issued on Dec. 31, 2019, granting California motor carriers an extended reprieve from the new worker classification law.ØThe Federal Aviation Administration Authorization Act (the FAAAA) preempts an “all or nothing” state law like AB 5 that prevents motor carriers to choose between using independent contractors or employees - “With AB-5, California runs off the road and into the preemption ditch of the FAAAA.”ØThe State has appealed the granting of the preliminary injunction.

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Los Angeles County Superior Court Issues Preliminary Injunction Enjoining Enforcement of AB 5 Against Motor Carriers

Ø In The People of the State of California v. Cal Cartage Transp. Express, Cal. Super. Ct., No. BC689320, the Superior Court Judge William Highberger on January 8, 2020, held AB 5B prong is pre-empted by the FAAAA.

o The requirements of the ABC test and AB 5 that codified Dynamex into law “clearly run afoul of Congress’ 1994 determination in the FAAAA” - a uniform rule endorsing the use of non-employee independent contractors throughout all 50 states.

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Central District of California Denies Preliminary Injunction of AB 5 denying Uber and Postmates Request to Enjoin AB 5.

In Olson, et al. v. State of California, et al., No. 2:19-cv-10956, C.D. Cal., District Court Judge Dolly Gee denied Uber and Postmates attempt to enjoin the enforcement of AB 5 because, although plaintiffs showed a measure of irreparable harm, the “balance of equities and the public interest weight in favor of permitting the State to enforce the legislation.

Ø Unlike the motor carrier cases under the FAAA, there was not a likelihood that the plaintiffs would succeed on the merits.

Ø The legislation targeted the gig economy, but that alone did not establish an Equal Protection violation.

Ø Judge Gee’s decision permits AB 5 to remain in force pending the outcome of the lawsuit. as to rideshare companies such as Uber, Postmates, and Lyft.

For its part, Uber has launched Project Luigi to circumvent AB 5. Project Luigi revamps its app with new features, enabling to see in advance the estimated trip fares, and declining riders without a penalty. This is mainly done to demonstrate that its drivers are self-employed independent contractors.

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AB 5 – A Threat to the Independent Contractor Model in the Ground Transportation IndustryØ AB 5 subjects rideshare companies to the “ABC test” to prove its drivers are not employees.Ø AB 5 effectively imposes employee status on gig economy independent contractors such as

Uber, Lyft, and DoorDash drivers.

Ø If these gig economy companies fail to establish their drivers are independent contractors, they will have to reclassify drivers as employees with all related benefits, thereby significantly increasing their operational costs.

Ø Forced reclassification will also result in far less freedom for drivers including mandatory schedules, pickups, deliveries, etc.

Ø Other states such as Virginia, New York, Illinois, Massachusetts, and New Jersey are stepping forward to adopt similar laws. If AB 5 is implemented nationwide, it would implicate over 13 million workers who produce over $1.6 trillion in economic output, about 8.5 percent of gross domestic product. (Los Angeles Times)

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Note on New Jersey ABC TestBedoya v. Am. Eagle Express, 914 F.3d 812 (3d Cir. 2019)

Ø The Third Circuit affirmed that the FAAAA does not pre-empt state law governing workers classification or employment status.o Whether the FAAAA pre-empts the ABC Test for purposes of New Jersey’s Wage and

Hour Law and Wage Payment Law.o New Jersey’s ABC Test is different and distinguishable.o New Jersey’s ABC test is not pre-empted by the FAAAA because contrary to

Massachusetts’ test, it includes an alternative method for independent contractor status—that is, by showing that the worker provides services outside the employer’s “places of business,” and the test does not prevent carriers from using independent contractors.

National Labor Relations Board Decision

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SuperShuttle DFW, Inc., 367 NLRB No. 75 (Jan. 25, 2019)

The National Labor Relations regulations relate to the legal framework for private-sector employees dealing with bargaining units in their workplace. The National Labor Relations Board (NRLB) found proper categorization of shuttle drivers at Dallas-Fort Worth Airport as independent contractors.

SuperShuttle sought dismissal of a petition filed by a unit of SuperShuttle drivers before NLRB claiming that the shuttle drivers were independent contractors, not covered employees.

The Board found drivers’ had unfettered control over their daily work schedules like deciding their passengers, routes, and workdays/hours on a given day.These factors provided shuttle drivers significant entrepreneurial opportunity to strongly support factors of independent contractor status. The company’s “control over the manner and means by which the drivers conduct business” and “the relationship between the company’s compensation and the amounts of fares collected” were the focus.

California Assembly Bill 51(AB 51)

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AB 51: California’s New Anti-Arbitration Statute

Ø The Act, codified in Government Code Section 12953 and California Labor Code Section 432.6, took effect January 1, 2020.

ØUnder AB 51, an employer cannot make an agreement to arbitrate mandatory, i.e., an employer cannot refuse to hire an applicant for refusing to agree to arbitration.

ØIn fact, employers cannot even request that the applicant to agree to arbitration; AB 51 makes such demands a criminal misdemeanour.

ØEven an opt-out provision is not allowed. Any such agreement or action is deemed a condition of employment.

ØAgreements to arbitrate disputes entered into voluntarily are still permitted, as are arbitration provisions included within negotiated severance and settlement agreements.

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AB 51 Exceptions

ØAB 51 is not intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act (FAA). [The Act expressly states that it does not “invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act (9 U.S.C. Sec. 1 et seq.)”]

ØThus, the question of whether AB 51 can survive attacks based on FAA pre-emption still remains. The FAA applies to any transactions where the parties are involved in interstate commerce.

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PRELIMINARY INJUNCTIONS HAVE ISSUED AGAINST

ENFORCEMENT OF AB 51

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Preliminary Injunction Enjoins Enforcement of AB 51

Ø In Chamber of Commerce of the United States v. Becerra, 2020 U.S. Dist. LEXIS 21850 (E.D. Cal. Feb. 6, 2020), the Eastern District Court of California granted a preliminary injunction prohibiting the state from enforcing AB 51.o The U.S. and California Chamber of Commerce and other pro-commerce and trade

organizations sued to enjoin enforcement of AB 51 on December 9, 2019, arguing pre-emption under the FAA.

o On December 30, 2019, the district court temporarily restrained the enforcement of AB 51 finding serious questions on pre-emption by the FAA and plaintiffs’ lack of adequate legal remedy.

o On February 6, 2020, the court found plaintiffs to have met their burden of showing that the FAA likely pre-empts AB 51 because AB 51 discriminates against arbitration and interferes with the FAA's objectives. The court, thus, found absent injunctive relief, California employers would experience irreparable harm.

Preliminary Injunction Against Enforcement of AB 5 Against Motor Carriers

ØIn California Trucking Association v. Xavier Becerra, et al., Case No. 18-cv-02458-BEN-BLM, Docket No. 77, S.D. Cal., Dec. 31, 2019, the Southern District of California temporarily restrained California from enforcing AB 5 against any motor carrier operating in California.

ØThe California Trucking Association (CTA) filed suit to stop enforcement of AB 5, alleging it was pre-empted by the Federal Aviation and Administration Authorization Act of 1994 (FAAAA), in November.

ØThe court found that the plaintiffs met their burden of showing a likelihood of success on the merits and irreparable harm if enforcement is not enjoined.

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Rideshare Companies May Qualify for Individual Arbitration Under the Federal Arbitration Act

The Supreme Court of the United States, in New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019) held that FAA exemption applies to transportation workers, including independent contractors. FAA exempts transportation workers engaged in interstate commerce from arbitration under the employment agreements.

The issue then becomes:

Whether a gig economy driver or delivery person is a transportation worker or engaged in interstate commerce under the FAA?

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Decisions Ordering Arbitration Under the FAA

Ø In Wallace v. GrubHub Holdings Inc., No. 18 C 4538, 2019 U.S. Dist. LEXIS 52629 (N.D. Ill. Mar. 28, 2019), the Northern District Court of Illinois held that drivers who deliver takeout orders from restaurants to consumers are not transportation workers “engaged in the movement of goods in interstate commerce” and as such are not subject to the Section 1 FAA exemption.o The drivers in a proposed class action alleged misclassification as independent

contractors and violation of the wage-and-hour requirements under the Fair LaborStandards Act, the Illinois Minimum Wage Law, and the California Labor Code. The defendant moved to dismiss the action and compel arbitration under the FAA.

o The court found drivers are not workers engaged in interstate commerce because their job duties do not involve handling goods that remain in the stream of interstate commerce, traveling to and from other states.

o The case was dismissed finding all claims subject to arbitration.

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Decisions Ordering Arbitration Under the FAA

Ø In Saxon v. Sw. Airlines Co., No. 19-cv-0403, 2019 U.S. Dist. LEXIS 174312 (N.D. Ill. Oct. 8, 2019), the Northern District Court of Illinois held that the FAA does not exempt the plaintiff because she is not a transportation worker as she does not transport cargo at all (even intrastate).o The plaintiff in a putative collective action alleged violation of the Fair Labor

Standards Act (“FLSA”) for failure to pay overtime wages. o The defendant moved to compel individual arbitration.o The court found plaintiff should individually arbitrate all wage and hour related

claims because her job duties include loading and unloading some cargo from defendant’s plane and supervising it and thus she was not transportation worker.

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Decisions Ordering Arbitration Under the FAA

Ø In O’Connor v. Uber Techs., 904 F.3d 1087 (9th Cir. 2017), the Ninth Circuit held Uber’s arbitration provision enforceable and reversed the class certification orders because the certification depended on the district court’s erroneous finding that Uber’s arbitration agreement was unenforceable.o The plaintiffs alleged violations of various federal and state statutes arising from

Uber's classification of drivers as independent contractors. Uber moved to compel arbitration under the arbitration agreements.

o The plaintiffs challenged the enforcement of arbitration agreements claiming that they had “constructively opted out of arbitration on behalf of the entire class,” and the agreements contained class-action waivers that violated the National Labor Relations Act (NLRA).

o The Ninth Circuit, however, rejected both arguments, holding that the plaintiffs’ opt-out argument was not supported by federal law, thus, pre-empted by the FAA. And, the NLRA argument was extinguished under Epic Systems finding class-action waivers do not violate NLRA.

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Cont.

o The Ninth Circuit emphasized that where drivers entered into agreements to arbitrate their claims and waived their right to participate in a class action on those claims, it cannot certify a class action.

o The Ninth Circuit, relying on its earlier decision in Mohamed v. Uber Technologies, Inc., 848 F.3d 1201 (9th Cir. 2016), found that the designated question to the arbitrator on the arbitrability was proper under the applicable arbitration agreements.

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Decisions Ordering Arbitration Under the FAA

Ø In Vargas v. Delivery Outsourcing, LLC, 2016 U.S. Dist. LEXIS 32634 (N.D. Cal. Mar. 14, 2016) the Northern District Court of California compelled arbitration holding that a luggage delivery service is not engaged in interstate commerce and thus not subject to Section 1 Exemption.o Plaintiff, a delayed luggage delivery driver to airline passengers, alleged

misclassification as an independent contractor.o The defendant moved to compel arbitration under their Owner/Operator Agreement.o The court found the driver not in interstate commerce because the luggage was not

a deliverable “good” until the delay or loss by the airline and then discovered when it was already intrastate.

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Decisions Ordering Arbitration Under the FAA

Ø In Levin v. Caviar, Inc., 146 F. Supp. 3d 1146 (N.D. Cal. 2015), the Northern District Court of California allowed individual arbitration holding that the local food delivery drivers do not fall within the transportation exemption to the FAA. o The court reasoned that local food delivery did not constitute interstate

commerce because the ingredients “ended their interstate journey when they arrived at the restaurant where they were used to prepare meals.”

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Third Circuit’s Decision Vacating Arbitration – A Threat to Rideshare Companies

Ø In Singh v. Uber Techs. Inc., 939 F.3d 210 (3d Cir. 2019), the 3rd Circuit exempted Uber drivers from arbitration and remanded the case to the district court after discovery to decide whether Uber drivers were engaged in interstate commerce. o If Uber drivers were transportation workers within § 1 of the FAA, they could not be

compelled to arbitrate employment disputes.o Significantly, the Third Circuit, took a position that appears contrary to conclusions

reached in many other cases holding that the Section 1 exemption was not limited to transportation workers who transport goods, but rather also applied to those who transport passengers, if they are engaged in interstate commerce.

o Thus, transportation workers who transport passengers may be exempt from the FAA if they are found to be engagee in interstate commerce.

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A sign of Hope: Uber Drivers May Be Subject to Arbitration for Actions Other Than Actions To Collect Due And Unpaid Wages

Ø In Uber Technologies Inc. v. Patel, CPF-17-515894 , San Francisco Superior Court Judge Richard B. Ulmer on November 26, 2019, ruled that Uber drivers engaged in interstate commerce are exempt under FAA Section 1 while driving passengers to or from international airports.o Uber moved to compel arbitration under the FAA and the driver sought recovery of

unpaid wages, overtime pay, vacation pay, meal and rest break premiums, and unpaid business expenses.

o The FAA Section 1 exemption excludes “contracts of…workers engaged in foreign or interstate commerce.” Muller v. Roy Miller Freight Lines, LLC (2019) 34 Cal.App.5th 1056, was relied to explain that “engaged in” interstate commerce under § 1 of FAA is narrower in scope than the open-ended phrase “involving” commerce in § 2 of FAA.

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Cont.

o The Labor Commissioner’s request for limited discovery on the issue of whether Uber drivers engage in interstate commerce was granted. Following that discovery, Uber was permitted to re-calendar its petition for hearing.

If Uber drivers are engaged in interstate commerce, then they are not pre-empted from filing a suit under Labor Code section 229 to collect due and unpaid wages despite a private agreement to arbitrate. Even so, other claims such as failure to reimburse business expenses, missed meal or rest periods, or failure to provide accurate wage statements, are subject to a valid and enforceable arbitration agreement.

PROTECT APP-BASED DRIVERS AND SERVICES

ACT

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Protect App-Based Drivers & Services Act - Basics

ØThe Protect App-Based Drivers & Services Act is a state-wide ballot measure aimed for the November 2020 California ballot to protect the rights of numerous Californians to choose flexible work on rideshare and delivery platforms.

ØThe ballot measure would enact labor and wage policies specific to app-based drivers and companies, including a net earnings floor based on 120 percent of the state's or municipality's minimum wage, preserving the driver’s opportunity to earn more with no caps.

ØImpose strong consumer and public safety protections.

Ø$0.30 per mile for expenses such as gas and vehicle wear and tear.

ØA health care stipend and occupational accident insurance for on-the-job injuries.

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Details of the Protect App-Based Drivers Act The ballot measure would:

ØProtect worker flexibility and independence

ØRequire new wage and benefit guarantees. Healthcare benefits are consistent with employees’ benefits under the Affordable Care Act. Drivers can earn a health care stipend after completing 15 work hours per week or more. Drivers receive multiple stipends if working with more than one company. After 25 work hours, a driver can earn a stipend equivalent to 82% of the cost for a Covered California Bronze Plan.

ØImplement new customer and public safety protections.

ØProtect access to affordable and convenient rideshare and delivery services.

ØTips will be on top of all wages, expense reimbursements and any company-specific inducements.

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Limited to gig economy drivers:

ØNarrowly crafted to protect the right of Californians to work as independent contractor drivers with on-demand rideshare and delivery companies, and to provide those on-demand drivers new benefits and protections.

ØFocused on specific types of work (independent contractors on on-demand rideshare and delivery network platforms).

ØThe ballot measure would permit delivery drivers to work as independent contractors and maintain control over their own hours and when, where, how long they work, and the ability to work with multiple companies. Thus, companies that assign fixed routes to contractors must allow the delivery drivers to maintain control over their routes, contrary to assigning the fixed routes.

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Decisions Effecting Independent Contractor Status

of Gig Economy Drivers

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Federal Department of Labor’s Opinion Favors Independent Contractor Status for Rideshare Companies

Ø The 2019 letter from the Wage and Hour Division (WHD) of the U.S. Department of Laborstates that service providers working for a Virtual Marketplace Company (VMC) are independent contractors, not employees.o The touchstone of employee versus independent contractor status has long been

“economic dependence.” See, e.g., Parrish v. Premier Directional Drilling, L.P., 917 F.3d 369, 379–80 (5th Cir. 2019).

o WHD considered six factors to determine economic dependence:i. The nature and degree of the potential employer’s control;ii. The stability of the worker’s relationship with the potential employer;iii. The worker’s investment in facilities, equipment, or helpers;iv. The skill, initiative, judgment, or foresight required for the worker’s services;v. The worker’s opportunities for profit or loss; andvi. The extent of integrating the worker’s services into the potential employer’s

business.

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Ø The Department observed economic independence in the working relationship between the VMC and its service providers based on the following:o VMC was the provider of referral service to the service providers, not a recipient of

services. The customers pay the service providers on a per-job basis.o The service providers had autonomy to choose their working hours/days.o The service providers were free to exit the working relationship and had no restriction

from interacting with competitors.o The purchase of all resources for service provider’s work is done by them without

reimbursement from VMC.o No interview or mandatory training of the service providers took place, other than the

information related to the workings of the virtual marketplace.o The service providers have no predetermined amount of compensation for their work,

but had a chance to control their profit or loss by their managerial skill,o VMC’s referral business does not operationally integrate the service providers as they

were the consumers of VMC’s referral business.

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Decisions Favoring Independent Contractor Status for Ride Share Drivers

Razak v. Uber Techs., Inc., No. 16-573, 2018 U.S. Dist. LEXIS 61230, at *1 (E.D. Pa. Apr. 11, 2018)Ø In a motion for summary judgment, the Eastern District of Pennsylvania found that

UberBlack drivers were independent contractors under the FLSA and the Pennsylvania Minimum Wage Act (“PMWA”). o The court applied the Third Circuit’s six-factor test developed in Donovan v. DialAmerica

Marketing, Inc., 757 F.2d 1376 (3d Cir. 1985), to determine whether a worker is an employee, which includes:i. The degree of the alleged employer's right to control the manner of work

performance;ii. The alleged employee’s opportunity for profit or loss depending on his managerial

skill;iii. The alleged employee’s investment in equipment or materials required for his task,

or his employment of helpers;iv. Whether the service required a special skill;

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Razak v. Uber, Cont.

iv. The degree of permanence of the working relationship; andv. Whether the service is key to the alleged employer's business.

o The totality of the circumstances favored independent contractor status because the drivers were free to determine their work hours, reject rides, use the Uber app, and to work for Uber’s competitors.

o Uber’s exercise of some control over drivers while using the Uber app does not convert such drivers into employees.

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Colopy v. Uber Techs. Inc., 2019 U.S. Dist. LEXIS 216020 (N.D. Cal. Dec. 16, 2019)

Ø The Northern District of California declined to order Uber to immediately reclassify its driver from independent contractor to employee finding the driver’s preliminary injunction against misclassification to be “ill-defined” and premature given the arbitration agreements and rejected Uber’s motion to dismiss the complaint finding the driver could plead sufficient facts that “could form the basis for declaratory relief.”o Plaintiff sought pre-certification injunctive relief arguing that he is seeking public-

not class-wide—injunctive relief.o Under McGill v. Citibank, N.A., 2 Cal. 5th 945, 216 Cal. Rptr. 3d 627(2017), merely

declaring that a claim seeks a public injunction is insufficient to bring that claim.

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Colopy v. Uber, Cont’d.

o Under McGill “[p]ublic injunctive relief must actually have the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the general public” and “[r]elief that has the primary purpose or effect of redressing or preventing injury to an individual plaintiff—or to a group of individuals similarly situated to the plaintiff—does not constitute public injunctive relief.”

o The driver sought private injunction and Uber’s arbitration agreement (upheld as enforceable by 9th Circuit) underscores preliminary injunctive relief is inappropriate.

o The driver has sufficiently pled violations of California law to support his allegation of misclassification against Uber that could support declaratory relief.

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Decisions Potentially Favoring Employee Status

O'Connor v. Uber Techs., 82 F. Supp. 3d 1133 (N.D. Cal. 2015)Ø The Northern District Court of California denied Uber’s motion for summary judgment on

employment status finding that the drivers were Uber’s presumptive employeesbecause they “perform services” for the benefit of Uber and Uber depended on its drivers for revenues.o The determination of employment status is a mixed question of fact and law. o Evaluated the extent of control based on the fact of whether Uber could fire a driver at-

will.o Dispute in facts, including those about Uber's level of control over the “manner and

means” of the drivers’ performance, precluded granting summary judgment to Uber.

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Decisions Potentially Favoring Employee Status

Alabsi v. Savoya, LLC, 2019 U.S. Dist. LEXIS 49675 (N.D. Cal. Mar. 25, 2019)Ø The Northern District Court of California held drivers were subject to control

sufficient to show an employment relationship and allowed all the drivers’ to proceed against defendant on denied minimum wage, meal-rest period, and other misclassification claims.o It is no possible to find that the defendant’s drivers are independent contractors at the

pleading stage.o The defendant assigned its drivers with customers, penalized for rejecting assignments,

strict dress code, mandatory meetings and the defendant had the right to terminate without cause upon 30 days’ notice.

o The defendant’s motion to dismiss on the basis of Part B of the ABC test was denied.

Questions ?

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Primary Contacts: Paul Marron, pmarron@marronlawyers.comPaul Arenas, parenas@marronlaw.comSteve Rice, srice@marronlaw.com(562) 432-7422

www.marronlawyers.com8-Attorney Misclassification Team. Nationwide Experience and Wins on Misclassification Cases handled in CA, AZ, CO, TX, OR, MO, MI, FL, AL, TN, MN, NY, and HI