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“To be or not to be” are the opening words of a soliloquy by Prince Hamlet. With that, I have exhausted what I remember about Shakespearean plays without consulting Wikipedia. Having consulted Wikipedia, I can confirm that this soliloquy occurs in Hamlet, Act III, Scene 1.

A lot happens in Act III and beyond, and if you stopped reading Hamlet after Act I, you’d miss most of the action, including assorted plotting, scheming and mayhem.

Last week in California, a different kind of mayhem began in a major case involving alleged independent contractor misclassification. In <a href="/wp-content/uploads/sites/7/2023/07/Calif-v-Uber-8-10-2020-prelim-inj.pdf" target="_blank" rel="noopener noreferrer">California v. Uber</a>, a state superior court judge granted a preliminary injunction, requiring ride-sharing app companies to reclassify California drivers as employees. But this order might not be the poisoned blade it seems to be. Either the ruling is a substantial blow, or it’s much ado about nothing. For now, it’s too early to tell. We’re still in Act I. Like in Hamlet, the real action will be in the later acts.

The court’s decision is based on Assembly Bill 5 (AB 5), a California law that took effect in January. Under AB 5, workers must be treated as employees unless they (A) operate free from the hiring party’s control, (B) perform work “outside the usual course” of the hiring party’s business, and (C) are engaged in an independent trade or business. (That’s a bit oversimplified. The full test is <a href="https://whoismyemployee.com/2019/09/16/california-businesses-may-need-emotional-support-clown-when-new-independent-contractor-law-takes-effect/" target="_blank" rel="noopener noreferrer">here</a>.) Fail any one part, and you’re an employee.

When arguing for independent contractor status, part B is the hardest part of the test to meet. The defendants in California v. Uber maintain that they are technology companies and driving is “outside the usual course” of their business. But their arguments in support of part B were not to be.

Because failing just one part of the test makes a worker an employee, Judge Ethan Schulman focused solely on part B. He concluded, “It’s this simple: Defendants’ drivers do not perform work that is ‘outside the usual course’ of their businesses.” There’s the rub.

The ruling is stayed for 10 days to allow the defendants time to appeal. That will be Act II. An appeal means more briefing and likely no decision before 2021. That delay is important because it sets the stage for Act III, which is the real showstopper.

Act III will take place Nov. 3, Election Day, when California voters will decide whether to pass <a href="https://ballotpedia.org/California_Proposition_22,_App-Based_Drivers_as_Contractors_and_Labor_Policies_Initiative_(2020)" target="_blank" rel="noopener noreferrer">Proposition 22</a>. Proposition 22 <a href="https://whoismyemployee.com/2020/06/01/new-rules-for-drivers-californias-abc-test-could-change-again-in-2021/" target="_blank" rel="noopener noreferrer">would allow</a> ride-sharing and delivery app companies to treat drivers as independent contractors, so long as they provide the drivers with <a href="https://whoismyemployee.com/2020/06/01/new-rules-for-drivers-californias-abc-test-could-change-again-in-2021/" target="_blank" rel="noopener noreferrer">certain types</a> of benefits and guarantees.

If Proposition 22 passes, AB 5 for the ride-sharing apps will be dead, just like Polonius and Ophelia and Gertrude and Laertes and Claudius and Hamlet. But you wouldn’t have known any of that if you had stopped reading after Act I. (Or if you neglected to check Wikipedia for a refresher.)

So stick around and let’s see what happens as the battleground turns to Proposition 22. Sword fighting and poisoned goblets seem unlikely, but there’s a lot more fighting to be done before this is over.

<a href="https://www.bakerlaw.com/ToddHLebowitz">Todd Lebowitz</a> is the practice team leader for BakerHostetler’s <a href="https://www.bakerlaw.com/ContingentWorkers" target="_blank" rel="noopener noreferrer">Contingent Workforce Practice Team</a>. For weekly updates on issues related to independent contractor misclassification and joint employment, subscribe to Todd’s blog, at <a href="https://www.employmentlawspotlight.com/wp-admin/whoismyemployee.com" target="_blank" rel="noopener noreferrer">whoismyemployee.com</a>.

Something Is Rotten in the State of California? Ride Share Misclassification Ruling Is Merely Act I