Postmates and Uber are suing the state of California over a gig economy law that is set to take effect this week. The new law will provide gig-workers with additional employee protections.
The lawsuit was filed in a Los Angeles federal court on Monday and is set to take effect this Wednesday. One driver from each company also joined the lawsuit as plaintiffs, arguing the law will breach equal protections, which are provided by the United States Constitution.
The Los Angeles law created stricter requirements to classify workers and independent contractors. AB5 has been controversial as it essentially implies workers for gig economies such s Uber and Postmates are to be considered as employees. Many of these companies argued against the law, claiming for a new form of employment for their businesses.
Companies such as Uber, Lyft, Postmates, and Doordash argue the state should create a new set of regulations and protections for gig workers instead of forcing them into the existing categories.
Many drivers and I met with California lawmakers and staff numerous times to help them understand how devastating this would be to us and the way we want to work. It became apparent that many were ill-informed of the real consequences of this bill, or they had already made up their minds to support it. My voice and my rights to due process were ignored, as were the rights of the rideshare companies and the hundreds of thousands of Californians who choose this type of work.
— Lydia Olson, Uber driver and plaintiff in this lawsuit, via Facebook
It is controversial in other industries as well. Freelance journalists are upset as it creates a limit of 35 contributions per news outlet annually, and that risks pushing a number of companies to no longer work with California writers. In fact, SB Nation, a news outlet focused on sports, announced they will transition their coverage of California sports teams to a staff-only operation, letting go of their freelancers.
What is the California Gig Economy law?
- A new California law going into effect on January 1 will make it more difficult for businesses to employ workers as independent contractors.
- Drivers who work for ride-sharing companies, delivery service drivers, construction workers, and various other gig workers may be affected by AB5