(Reuters) – Ride-hailing company Uber Technologies Inc and courier services provider Postmates Inc asked a U.S. court to block a California labor law set to go into effect on Wednesday, arguing the bill violates the U.S. Constitution.
In a lawsuit filed in Los Angeles federal court on Monday, the companies and two app-based drivers said the law, which would make it harder for gig economy companies to qualify their workers as independent contractors rather than employees, was irrational, vague and incoherent.
The office of California Attorney General Xavier Becerra said in a statement on Monday it was reviewing the complaint. The bill, called AB5, faces multiple legal challenges.
Backers of the bill, including labor groups, have argued the law protects workers’ rights. By classifying the contractors as employees, the companies would be subject to labor laws that require higher pay and other benefits such as medical insurance.
The bill strikes at the heart of the “gig economy” business model of technology platforms like Uber, Postmates, Lyft Inc, DoorDash and others who rely heavily on the state’s 450,000 contract workers, not full-time employees, to drive passengers or deliver food via app-based services.
Ron Herrera, secretary-treasurer of Teamsters Local 396 and Teamsters International vice president, said in a statement late on Monday night, that the labour union objects the lawsuit challenging the constitutionality of AB-5.
“Teamsters Local 396 and the broader American Labor Movement must use all of the resources at our disposal to ensure that AB-5 is protected and that workers have a voice at the table,” Herrera added.
Uber, Lyft and food delivery company DoorDash have earmarked $90 million for a planned November 2020 ballot initiative that would exempt them from the law.