(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.
The law was signed by California Governor Gavin Newsom in September and has garnered national attention, largely owing to the size of California’s workforce and the state’s leadership role in establishing policies that are frequently adopted by other states.
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.
