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AB 5, Proposition 22 still causing businesses trouble

by | May 24, 2021 | business litigation

In 2019, California gained national attention when state lawmakers signed Assembly Bill 5 into law. And the response to the law was quick. Several companies – namely Uber and Lyft – objected to the regulations.

The dispute over AB 5 continued until last November. Then, Californians passed Proposition 22 to exempt the gig rideshare companies from the classification regulations.

However, passing the proposition did not put an end to disputes for a number of gig companies.

Gig companies continue to grapple with lawsuits

CNN reported that Proposition 22 would benefit gig economy companies. And yet, several of these app-based businesses are still facing legal issues regarding worker statuses.

Why do these disputes continue? Reports state that Proposition 22 does not cover all gig companies the same. While it exempts Uber and Lyft, it still holds several other gig companies to the strict conditions.

Bloomberg reports that several gig companies are currently facing lawsuits in California, including:

  • Handy Technologies Inc.
  • TaskRabbit Inc.
  • Rover Inc.
  • Lime

There is no doubt that these lawsuits pose a considerable risk to the businesses. Many of them face a double threat from workers filing claims and district attorneys. The report from Bloomberg said that the continuation of these lawsuits could put gig companies at risk of surviving operation, even aside from legal concerns.

Business owners must be mindful

The gig economy continues to grow, especially in the current circumstances. But as it grows, so do the potential hazards businesses face in the legal landscape. Gig companies already face a wide range of legal issues, including:

  • Occupational health and safety concerns
  • Labor and pay disputes
  • Contract disputes

And, of course, worker status disputes. The gig economy is not anything new to the business world. But in this era of increasing regulation, business owners must take great care to build strategies that protect their business’s operation.

There is still plenty of pushback against the effects of AB5. Even so, business owners should ensure they comply with the necessary laws and carefully examine their workers’ statuses to avoid such lawsuits.