LOS ANGELES – A U.S. district judge has declined to grant two "gig economy" companies a preliminary injunction against the effects of Assembly Bill 5, which limits businesses' ability to classify workers as independent contractors.
Uber Technologies Inc. and Postmates Inc. together sought an injunction from the bill, which took effect at the turn of the year. The companies are challenging the new law as unfair because it will allegedly increase their labor costs by 20 to 40%, according to Fleet Owner.
During the Los Angeles hearing, U.S. District Judge Dolly M. Gee stated that the lawsuit was “a steep hill to climb” for the companies to win the argument that the bill irrationally targets app-based business models.
“I can’t second-guess the legislature unless you show me an example of an exemption that absolutely doesn’t make sense,” Gee told Fleet Owner.
The Record reached out to Uber for further comment on the ruling and the controversial bill that has sparked a number of similar lawsuits from gig-economy, app-based companies and beyond.
“State legislators had the opportunity to expand benefits for hundreds of thousands of independent workers in California, a step Uber has been advocating for and one that other states already have taken,” wrote Uber. “Instead, they passed AB 5 using a biased and overtly political process that ignored the voices of the workers most affected by the law and granted preferential treatment to an arbitrary group of industries. We are joining a growing group of companies and individuals suing to ensure that all workers are equally protected under the law and can freely choose the way they want to work.”
The lawsuit was originally filed on Dec. 30, 2019, just days before the law took effect.
According to recent reports, Uber, Lyft, Postmates, Instacart and DoorDash have pledged more than $110 million towards a ballot measure to change AB 5.