Uber, Postmates sue Calif. to block gig-worker law

Uber Technologies and Postmates have sued the state of California, alleging that a labor rights law set to go into effect this week is unconstitutional.

The lawsuit filed Monday in Los Angeles federal court is a preemptive strike against the state’s landmark measure designed to ensure gig workers receive employment protections. Uber and Postmates argue the legislative process around California’s Assembly Bill 5 unfairly targeted gig economy companies while favoring other industries and that the law will threaten workers’ flexibility.

The passage of A.B. 5, which takes effect Wednesday, has set in motion a bitter dispute about the rights of Uber drivers, food couriers and other people who derive their income from apps made in Silicon Valley working as independent contractors.

Uber and Postmates say it’s arbitrary that direct salespeople, travel agents, grant writers, construction truck drivers, commercial fishermen and others are exempted from the law.

“There is no rhyme or reason to these nonsensical exemptions, and some are so ill-defined or entirely undefined that it is impossible to discern what they include or exclude,” according to the complaint.

The impact of A.B. 5 — and the backlash against it — extends beyond the technology industry. Two organizations representing freelance journalists brought a legal challenge this month, saying the law restricts free speech and the news media by effectively limiting the number of articles a contract journalist can write for the same publication each year.

The trucking industry, in its own lawsuit, says the measure would make it “impractical if not impossible” to use independent contractors for services across state lines.

But tech companies have far more at stake financially if they are forced to provide overtime pay, health care and other benefits to the armies of contract laborers they rely on to drive customers around and deliver food.

With their business models threatened, DoorDash, Lyft and Uber have said they’ll spend a combined $90 million on a campaign asking California voters to overturn the law in the next election. Lyft and Uber have each committed to turning a profit by the end of 2021, a promise that could be unattainable if they’re forced to reclassify workers in their home state.

In Monday’s complaint, Uber, Postmates and one driver from each company who are also plaintiffs said they want a judge to block A.B. 5 from being implemented. They alleged that the law violates guarantees of equal protection afforded by both the U.S. Constitution and the California Constitution.