Postmates and Uber filed lawsuit against newly passed labor law

A courier service provider Postmates along with a popular ride-hailing company Uber have mutually filed a lawsuit against a labor law bill arguing that the bill violates the Constitution of US law.

The legislation is known as Assembly Bill 5. It is known to change the way the state designates the workers as employees or freelance contractors. It could classify many drivers working for companies like Uber and Postmates as employees instead of contractors. Meaning thereby the workers can get benefits like pay time offs and health insurance provided by employers.

Both the companies said that this bill can damage their businesses financially and that the law is very “unconstitutional”. In October Uber, DoorDash, and, Lyft submitted a ballot initiative in trying to exempt themselves from bill A.B.5.

The State Democratic Assemblywoman and the author of this Bill Loren Gonzalez said: “The one clear thing we have known about Uber is that they will do anything to try to exempt themselves from state regulations that make us all safer and their driver employees self-sufficient”.

Furthermore Uber said that even after the law is passed, it will still consider its employees as independent contractors and will also defend its decision in court if it has to. According to the tech companies they are going to get into stake financially if they are compelled to offer overtime wage, health insurance, along with other benefits to a large number of hired contractors. Although the companies heavily rely on the employees to deliver food to the customers and to drive them around respectively.

As per The Governor of California Gavin Newsome, Bill A.B.5 states that workers can generally be categorized as contractors if they are performing their duties outside of the company’s business. The employee determination test is rather straightforward than the previously existed law.