Uber, Postmates sue to block California gig worker law, claiming it's unconstitutional
Uber
Ride-hailing companyUberTechnologies Inc and courier services providerPostmatesInc asked a UScourt toblockaCalifornialaborlawset to go into effect on Wednesday, arguing the bill violates the USConstitution.
In alawsuit filed in Los Angeles federal court on Monday, the companies and two app-based drivers said thelaw, which would make it harder forgigeconomy companies to qualify theirworkers as independent contractors rather than employees, was irrational, vague and incoherent.
The office ofCaliforniaAttorney General Xavier Becerra said in a statement on Monday it was reviewing the complaint. The bill, called AB5, faces multiple legal challenges.
Thelawwas signed byCaliforniaGovernor Gavin Newsom in September and has garnered national attention, largely owing to the size ofCalifornia's workforce and the state's leadership role in establishing policies that are frequently adopted by other states.
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Backers of the bill, including labor groups, have argued thelawprotectsworkers' rights. By classifying the contractors as employees, the companies would be subject to laborlaws that require higher pay and other benefits such as medical insurance.
The bill strikes at the heart of the "gigeconomy" business model of technology platforms likeUber,Postmates, Lyft Inc, DoorDash and others who rely heavily on the state's 450,000 contractworkers, not full-time employees, to drive passengers or deliver food via app-based services.
Uber,Postmatesand other app-based companies said the legislation compromises the flexibility prized by their workforce, and that fewerworkers would be hired were they considered employees.
The companies in their Mondaylawsuit called AB5 a "thinly veiled attempt" to target and harmgigeconomy businesses. Singling out app-basedworkers violates equal protection guaranteed under the constitutions of the United States andCalifornia, the companies argued.
"It irreparably harms network companies and app-based independent service providers by denying their constitutional rights to be treated the same as others to whom they are similarly situated," thelawsuit said.
The companies pointed to allegedly arbitrary exemptions of different non-gigworkergroups, including salespeople, travel agents, construction truck drivers, and commercial fishermen.
The full impact of the bill remains unclear in the short term, but thelawsuit cited a study saying the bill would increase ride-hailing company Lyft's operating costs by 20 per centand lead to some 300,000 fewer drivers inCalifornia.
Uber, Lyft and food delivery company DoorDash have earmarked $90 million for a planned November 2020 ballot initiative that would exempt them from thelaw.