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Uber And Postmates Suffer Blow In Bid To Stop AB 5 Temporarily

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A federal judge has ruled to deny Uber and Postmates’ request to have them put a temporary stop to the AB 5 pending the determination of another suit aiming to declare the law invalid.  The law will require the gig companies to reclassify their drivers as employees.

 

US District Judge Dolly M. Gee wrote in a 24-page ruling on 10th February 2020:

 

“The court does not doubt the sincerity of these individuals’ views, but it cannot second guess the legislature’s choice to enact a law that seeks to uplift the conditions of the majority of nonexempt low-income workers.

 

“The balance of equities and the public interest weigh in favor of permitting the state to enforce this legislation.”

 

AB 5 will redefine employment classification for gig companies like Uber, Lyft, Postmates, and DoorDash. These workers were classified as independent contractors before AB 5.

 

An advantage of the classification as independent contractors can mean increased flexibility for workers. It can also mean those drivers are also bearing the costs of the business.

Also Read:
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Uber Postmates AB 5
Drivers gather in support of AB 5 legislation outside Uber HQ in San Francisco Photo: Jana Asenbrennerova

 

Uber drivers have to pay for their own car, phone, gas and vehicle maintenance. They also don’t get basic benefits, like minimum wage guarantees, overtime pay, and health insurance under the former regime.

 

AB 5, came into effect on 1st January 2020. It meant that all the companies using independent contractors in California will undergo a three-part test to determine if they must reclassify their workers. If they don’t pass that test, they’ll have to reclassify their workers into employees.

AB 5 will cost Uber $500 million per year

A Barclays analysis from June 2019 said reclassifying California drivers could cost Uber about $500 million per year. The analysis also said reclassifying  Lyft drivers would cost the company up to $290 million per year.

 

“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,” an Uber spokesman said in a statement.

 

Uber, Postmates and two gig workers, Lydia Olson and Miguel Perez, sued the state of California in December 2019 with the aim to declare AB 5 invalid. The lawsuit alleges that AB 5 is unconstitutional, unfairly targeting gig economy companies and workers.

 

They requested a preliminary injunction against the law which would have suspended the law while the case was being considered. This injunction is what is being denied.

 

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