Uber and Postmates Sue State of California over Assembly Bill 5

In an effort to protect employees from intentional misclassification as independent contractors, California implemented Assembly Bill 5, effective in 2020. This bill allows independent contractors to file claims under a variety of worker protection laws to secure compensation or compel their employers to reclassify them as employees.

Before even taking effect, the bill has backfired. Uber and Postmates, app-based ridesharing and delivery service businesses, have sued California in U.S. District Court in Los Angeles. Freelance journalist organizations and even the California Trucking Association have challenged the bill as well.

Per the ABC test, a person only qualifies as an independent contractor if they:

  • Control and direct their own work
  • Perform work that the hiring entity does not typically conduct within their business
  • Perform work for the hiring entity that is within the scope of the worker’s usual trade, occupation, or business

As such, app-based workers like the drivers for Uber and Postmates no longer qualify as independent contractors. Thus, these companies must provide their drivers with employee status and coinciding benefits (e.g. paid leave, workers’ comp, healthcare, etc.). Uber has stated that, if forced to change the status of its workers, it will need to hire far fewer employees and limit the number of areas where it operates.

Uber and Postmates advocate for California’s current “gig economy,” which allows workers the flexibility and autonomy they wouldn’t experience if they were employees. Many choose to drive for apps like Uber and Postmates because they want to choose their own hours and make extra money on the side as needed. Employee-status would interfere with this flexibility by imposing schedules and weekly hour-minimums.

The lawsuit even claims that AB 5 is unconstitutional because it targets some workers and companies but not others, allegedly violating equal protection and due process. Uber has stated that, because it is an app, AB 5 does not apply to it, but the company is moving forward with the lawsuit to prevent future claims. Uber has threatened to pay $90 million to fight AB 5 and avoid paying hundreds of millions in additional expenses the bill would require. Meanwhile, in an interview with the Sacramento Bee, Assemblywoman Lorean Gonzalez juxtaposed Uber’s chief executives’ soaring salaries with drivers “forced to sleep in their cars.”

While most believe independent contractors need greater protections, AB 5 is currently a source of heated debate. Many appreciate and depend upon California’s gig economy, but others have experienced unchecked discrimination and severely low wages as a result of their independent contractor status.

Unsure of How AB 5 Might Affect Your Status?

If you are an independent contractor or “gig worker,” you may not know whether AB 5 will require your hiring entity to reclassify you as an employee. At Limonjyan Law Group, we have cultivated an in-depth understanding of California employment law, and we work tirelessly to stay up-to-date with ever-changing statutes. When you get in touch with our team, we will help you understand what to expect in 2020, and we will fight for you in a court of law if your employer or hiring entity has violated your rights.

Schedule your initial consultation with our firm or give us a call at (213) 377-6707 today.

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