Uber, Postmates sue to stop AB5, claim it’s unconstitutional

Ride-hailing giant Uber Technologies Inc. and food delivery service Postmates Inc. filed a lawsuit late Monday afternoon against California Attorney General Xavier Becerra alleging the employee-presumptive Assembly Bill 5, which takes effect Wednesday, is unconstitutional.

According to the complaint filed in the Central District of California, the two "gig economy" companies claim AB 5 violates the U.S. Constitution's Ninth and 14th Amendments, Article I, and the contracts clause.

The legislation, signed into law by Gov. Gavin Newsom in September also violates the equal protection, inalienable rights, due process and contracts clauses of the California Constitution, the complaint alleges. Olson v. California, 19-CV10956 (C.D. Cal., filed Dec. 30, 2019).

"AB 5 is an irrational and unconstitutional law statute designed to target and stifle workers and companies in the on-demand economy," the complaint reads.

Along with named plaintiffs Lydia Olson and Miguel Perez, the companies claim their business model is a free market system that allows independent service providers the flexibility and freedom to work based on their own schedules and preferences, the suit alleges.

The law, introduced by Assemblywoman Lorena Gonzalez, D-San Diego, and codifying the decision in Dynamex Operations West, Inc. v. Superior Court, 2018 DJDAR 3856, is a hostile attempt to "force network companies to change their classification of workers who use their technology" from independent contractors to employees, the suit alleges.

Under AB 5, workers are now presumed employees unless they pass the three-prong "ABC" test and prove they are a) free from the hirer's control and direction, b) work outside the usual course of the hirer's business, and c) engage in the same kind of work as the hirer independently, to be considered independent contractors.

"Today, Uber will join Postmates and two independent workers in California to bring a constitutional legal challenge of Assembly Bill 5 (AB5) on the basis of lack of equal protection and due process under both federal and state law," Uber said Monday in a statement.

Calls to Becerra's office were not immediately returned late Monday.