Uber and Postmates File Lawsuit Against California's Assembly Bill 5


Uber and Postmates have filed a lawsuit against Assembly Bill 5 in California to avoid its financial repercussions.

The lawsuit claims that AB 5 is unconstitutional. More specifically, the suit asserts that AB 5 violates the equal protection and due process clauses of the fourteenth amendment as well as the ninth amendment.

Assembly Bill 5 would require that employers consider any individual it pays to be an employee. This bill would essentially neuter California’s gig economy. Currently, employers can categorize certain individuals that work for them as contractors. Contractors don’t have to be paid a minimum wage, get paid time off or employer-provided health insurance. However, employees do. As a result, this would financially threaten tech companies, such as Uber and Postmates, that heavily rely on contractors.

Assemblywoman Lorena Gonzalez is the state politician who authored the bill and has expressed frustration at this latest development.

“First, Uber sought not only an exemption from AB 5 but from all California labor laws,” Gonzalez said. “Then, they said they wouldn’t abide by AB 5 anyway. Then, they said AB 5 didn’t apply to them because they weren’t a transportation company.”

Uber and Postmates are also launching a ballot initiative that would put this issue to voters.

Read full story here.


Economics, Finance and Investing