Last month gig economy companies like Uber announced a petition drive to repeal Assembly Bill 5 (AB5) which expanded workers’ compensation benefits and other employment protections to gig economy workers and others in California.
AB5 should increase workplace protections for Lyft and Uber drivers, but what can California’s previous attempts to help professional drivers tell us about the future of AB5? It may explain why the gig economy companies are working at a state rather than the federal level.
Rest breaks for truckers
California amended their wage and hour law to require employers give truckers a break after five hours of service. That law offered more protections than federal law, At the end of 2018, the Federal Motor Carrier Safety Administration ruled that California law on breaks was preempted by federal law.
There is nothing new about employers running to the federal government to undo state laws that improve workers’ rights — those efforts date back at least to the Dred Scott decision in the 1857.
So what are the chances that AB5 will suffer the same fate as California’s efforts to insure fair pay and working conditions for truckers? I think AB5 will be harder to undo on a federal level for a few reasons.
Preemption of federal law by state law has a better chance of succeeding if there is a strong constitutional basis for federal regulation. In the case of trucking, the interstate commerce clause gives the federal government a solid basis for regulating trucking. It’s easier to argue that federal law should preempt state law in an industry that clearly falls within Congressional power to regulate.
In contrast, workers’ compensation laws are state-based laws enacted under state police powers. Workers’ compensation is a form of insurance and Congress has largely delegated insurance regulation to the states. So at least for the workers’ compensation provisions of AB5, I believe there is almost no chance that federal courts would rule that part of the legislation would be preempted by federal court.
The reason the trucking industry had to rely on a ruling by the FMSCA to invalidate California’s law on detention pay for truckers, was that it was unable to get the so-called Denham amendment passed. In other words, the trucking industry failed to change the law legislatively, so they ran to the executive branch rule making process to get what they wanted.
I started paying close attention to worker classification and portable benefit schemes as they related to the gig economy in 2015. I read a paper from the Democratic-leaning Hamilton Project promoting portable benefit schemes for gig economy workers. Part of that paper included a quote from former Treasury Secretary Bob Rubin stating that there needed to be reform of labor laws for the 21st century. Rubin was an architect of financial deregulation in the 1990s, so the idea of him doing the same for labor laws horrified me.
What horrified me was the prospect of Wall Street and Silicon Valley influenced Democrats working with Republicans in some “grand bargain” or feat of “bi-partisanship” to hammer the coffin nail in state workers’ compensation laws from a federal level.
But if the trucking industry can’t even pass the Denham amendment. (BTW Representative Jeff Denham was defeated in 2018), a federal grand bargain on the gig economy seems far-fetched. The Democratic Party, at least on paper, has become a stronger supporter of worker rights over the last four years. Labor militancy has made a comeback in the last four years. The tech industry has also seen its reputation and popularity lag over the last four years.
Gig economy companies are still attempting to weaken America’s already weak employment laws, but the passage of AB5 in California shows their efforts can by stymied.