Ride-hailing service Uber filed a lawsuit Monday against the state of California, alleging a landmark gig-worker law set to go into effect is unconstitutional. The lawsuit seeks to block AB 5, which has the potential to upend gig economy companies such as Uber and Lyft.
The complaint, which also lists Postmates as a plaintiff, argues that the law unfairly targets workers and companies in the on-demand economy, treating them differently than traditional employees and threatening their flexibility.
In September, California became the first state to pass a law aimed at protecting gig worker rights, which forces Uber, Lyft, DoorDash, Postmates and other gig economy companies reclassify their workers as employees. Using independent contractors allows the companies to shift many costs to the workers.
The lawsuit says the law arbitrarily exempts dozens of occupations, including direct salespeople, travel agents, grant writers, commercial fishermen and construction truck drivers, among others.
“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,” says the complaint (see below), which was filed in a Los Angeles federal court.
Gig workers typically don’t get benefits like health insurance, paid sick days and overtime. And Uber and Lyft drivers have to pay for their own cars, gas, vehicle maintenance and insurance. Many drivers say this system has led to exploitation.
Uber and Lyft have both said their businesses could be broken if they’re required to reclassify their drivers as employees. The two companies have spent $30 million each to sponsor a ballot initiative for November 2020 that could exempt them from the law.
Monday’s lawsuit asks the court to block AB 5 from going into effect on Wednesday, alleging it’s unenforceable because it violates equal protection clauses in the US and California constitutions because it treats network and non-network companies differently.
Under the law, signed into law by California Gov. Gavin Newsom in September, all companies using independent contractors in the state will be put to a three-part test that looks at how much control the company has over its workers. The test looks at things like whether the company has workers wear uniforms, use its equipment and follow its business mandates.
Lyft has said AB 5 doesn’t automatically reclassify drivers as employees, while Uber told CNET that it has “no plans to re-classify our drivers or change our business model.”
The California Attorney General’s Office couldn’t immediately be reached for comment.
CNET’s Dara Kerr contributed to this report.