Ride-hailing giant Uber Technologies and courier services provider Postmates requested a U.S. court to dam a California labor law set to enter effect on Wednesday, arguing the bill breaches the U.S. Constitution.
In a suit filed in Los Angeles federal court Monday, the companies and two app-based drivers stated the law, which might make it more robust for gig economy firms to qualify their workers as independent contractors rather than staff, was irrational, vague and incoherent.
The office of California Attorney General Xavier Becerra mentioned in a statement Monday it was reviewing the complaint.
The law was passed by California Governor Gavin Newsom in September and has garnered nationwide attention, mainly owing to the size of California’s workforce and the state’s management role in establishing policies that are steadily adopted by other states.
Supporters of the bill, including labor unions, have argued the law protects workers’ rights. By classifying the contractors as employees, the businesses would be subject to labor laws that require higher pay and other benefits comparable to medical insurance.
The bill strikes at the core of the “gig economic system” business model of technology corporations like Uber, Postmates, Lyft, DoorDash, and others who depend heavily on the state’s 450,000 contract workers, not full-time workers, to drive passengers or deliver food through app-based platforms.
Uber, Postmates, and other app-based firms stated the laws jeopardize the flexibility prized by their workforce.
The service providers in their Monday suit called AB5 a “thinly covert attempt” to target and cripple gig economy businesses. Singling out app-based workers breaches equal protection guaranteed under the laws of the United States and California, the companies claimed.