Uber and Postmates Claim CA Gig Economy Bill is Unconstitutional

On December 30, Uber and Postmates, as well as a few of the companies’ workers, filed a complaint (Lydia Olson et al v. State of California et al 2:19-cv-10956-DMG-RAO) against the state of California regarding CA AB-5, a recently signed law that reclassifies gig workers as employees. The companies claimed the bill is unconstitutional. The AB-5 bill limits the circumstances in which companies can classify workers as independent contractors. AB-5 went into effect on January 1. The complaint alleged that it is unconstitutional to limit how companies can classify independent contractors.

The complaint argued that AB-5 violated the constitution of both the United States and California, including equal protection and due process rights. It alleged that gig workers for ridesharing and on-demand delivery companies are not allowed to classify its workers the same way as companies in 20 other industries who do “substantially identical work.”

The complaint stated that “AB 5 is an irrational and unconstitutional statute designed to target and stifle workers and companies in the on-demand economy.” Both the companies and individual plaintiffs fear the new bill will hinder worker freedom and flexibility. Additionally, the complaint stated that the app-based on-demand economy has made it easier to find independent workers and it has eliminated barriers and costs for consumers. The complaint stated that there could be unintended consequences and that “[f]or some companies, the burdens of restructuring their businesses and the potential penalties from the threatened enforcement of AB 5 could force them to stop doing business in California.” As evidence that it violates AB-5, the complaint alleged that “the vast majority of the statute is a list of exemptions that carve out of the statutory scope dozens of occupations, including direct salespeople, travel agents, grant writers, construction truck drivers, commercial fisherman, and many more. There is no rhyme or reason to these nonsensical exemptions, and some are so ill-defined or entirely undefined that it is impossible to discern what they include or exclude.” The complaint stated that this violated the Equal Protection clause because it has different rules and burdens for exempt and non-exempt workers. A restructuring would upend the contract working field with unintended consequences. Additionally, the plaintiffs argue these arbitrary rules will hurt workers who rely on the flexibility for their incomes and that exemptions should not be seemingly random.

Those opposed to the new bill state that it hinders worker flexibility. Plaintiff Miguel Perez, a Postmates delivery driver, stated on Postmates blog, “I chose to deliver on Postmates only when I wanted to so that I could see my kids more. I used other on-demand apps when I wanted to, to make the best use of my time and skills and make more money running my own delivery business.” Perez liked the flexibility he had with Postmates, compared to when he was a truck driver and worked long and inflexible hours. He stated that AB-5 “is threatening the freedom and flexibility I have relied on in recent years to support my family.” He does not want to have to go back to working as a truck driver or a delivery person full time for a restaurant.

Postmates stated, “AB5 is a blunt instrument, which is why lawmakers exempted 24 industries, seemingly at random, from its requirements.” Postmates does not want to be exempt from AB-5 or the Dynamex standard. Rather, it wants to “call for industry and labor talks with the California legislature to modernize a robust safety net designed specifically for the needs of on-demand workers, that establishes a new portable benefits model, creates earnings, guarantees higher than minimum wage, and gives all workers both the strong voice they need and flexibility they demand—a framework not currently contemplated under state and federal law.”

Lorena Gonzalez, the Assemblywoman who authored AB-5, in response to the suit, tweeted, “[t]he one clear thing we know about Uber is they will do anything to try to exempt themselves from state regulations that make us all safer and their driver employees self-sufficient.”

This is not the first attempt to stop or limit AB-5. Lyft, Uber, and DoorDash submitted a California ballot initiative for the November election. Freelance journalists also filed a suit against AB-5’s constitutionality.

The plaintiffs have sought declaratory, injunctive and other relief from California AB-5. The plaintiffs are represented by Gibson, Dunn & Crutcher. The complaint was filed in California Central District Court.