Ride-sharing giant Uber and courier service Postmates have filed a lawsuit aimed at putting the brakes on California’s new law that will reclassify gig workers as employees, potentially burdening tech companies with millions of dollars in new personnel costs.
The lawsuit, filed Monday in a Los Angeles federal court, claims that the law violates the U.S. Constitution because it singles out app-based gig workers and online companies for unfair treatment, according to multiple reports.
The companies claim that the law would deprive their drivers of the right to earn a living in the manner of their choosing. They also called it a “thinly veiled attempt” to target gig economy businesses.
“It irreparably harms network companies and app-based independent service providers by denying their constitutional rights to be treated the same as others to whom they are similarly situated,” the complaint states.
Silicon Valley tech giants have mobilized to combat the new law, which was known as AB5. and is set to take effect January 1. The law would potentially entitle gig workers to benefits and perks, like a minimum wage and sick pay.
Uber attorneys argued earlier this year that the law doesn’t apply to the company because drivers’ work falls “outside the usual course of Uber’s business,” which they define as providing a technology platform.
The ridesharing company is joining forces with Lyft and Doordash to mount a $90 million counteroffensive against the new law.
Labor activists have agitated in favor of the law, saying that it provides drivers and other gig workers with a living wage and benefits. Democratic politicians have also backed the law.
“California is now setting the global standard for worker protections for other states and countries to follow,” Democratic State Assemblywoman Lorena Gonzalez, the bill’s author, said in a statement in September.
Gov. Gavin Newsom (D-CA) has also supported the law, but has stated that he wants to reach out to Uber and other affected companies. Newsom told the Wall Street Journal in September that he’s still in discussion with the companies about potential negotiations.
In Monday’s complaint, Uber and Postmates cited a study claiming the new law would increase Lyft’s operating costs by 20 percent and cause a reduction of about 300,000 drivers in California.
The office of California Attorney General Xavier Becerra told multiple news outlets in a statement on Monday that it was reviewing the complaint.