The Uber logo hangs outside at the New York Stock Exchange on Wall Street in May. The company with Postmates is suing California to prevent a law reclassifying freelancers from going into effect Wednesday. Photo by John Angelillo/UPI | License Photo
Dec. 31 (UPI) -- In a federal lawsuit filed Monday, Uber and Postmates asked a judge to issue an injunction against Assembly Bill 5 scheduled to go into effect Wednesday that changes the way freelance workers are classified.
The new law would force ride-sharing companies like Uber and delivery businesses such as Postmates to classify many of their drivers as employees rather than independent contractors, adding up to 30 percent to their labor costs, according to employment experts.
"This lawsuit is an effort to preserve on-demand work opportunities," Postmates said in a statement calling on state legislators, organized labor and Gov. Gavin Newsom to develop a compromise bill.
Uber claims the new law lacks "equal protection and due process under both federal and state law" making it unconstitutional.
The companies along with an Uber driver and a Postmates courier filed their lawsuit in U.S. District Court in Los Angeles.
The bill's author, California Assemblywoman Lorena Gonzalez, pushed back, saying that the bill protects workers in the gig economy.
"[Uber] will do anything to try to exempt themselves from state regulations that make us all safer and their driver employees self-sufficient," Gonzalez said. "First, Uber sought not only an exemption from AB 5 but from all California labor laws.
"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. Then, they said they would create a ballot initiative to exempt themselves from AB 5. And now Uber is in court bizarrely trying to say AB 5 is unconstitutional," she added.
For now, a federal judge will decide whether to grant a preliminary injunction blocking the law from being enforced, which could become permanent. Truck drivers, freelance writers and photographers have filed their own lawsuits over the new California law as well.
The law is based on a 2018 California Supreme Court decision that established a stricter test to determine when companies can claim workers as independent contractors and expand who in that group can receive unemployment benefits and other labor protections.