Wednesday, August 19, 2020
In a previous post, I blogged about the legal (and particularly, legislative) constraints on private parties to recharacterize legally defined relationships such as calling an employee an independent contractor. In CA, the issue has been heating up and reached a critical point when AB 5, a new law addressing the classification of employees v. independent contractors, went into effect. As I mentioned in that prior post, the California Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego, and San Francisco sued Uber and Lyft, arguing that they had misclassified their drivers as independent contractors when they should be employees under AB 5. Last week, a California judge agreed and issued a preliminary injunction compelling the companies to classify their drivers as employees immediately (due to the pandemic, this issue has even greater urgency given have financially stressed many drivers are. Uber and Lyft ridership is also way down). The Verge has the story and a copy of the complaint.
The takeaway is that parties to a contract may allocate their rights and responsibilities but only in areas where they have the authority to do so. Private parties do not have the right to characterize their relationship in a way that doesn’t reflect reality (as defined by statute). Facts matter, even in contracts.