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Uber (NYSE:UBER) And Postmates Goes To Court To Block Controversial Gig-Worker Legislation

Uber Technologies (NYSE:UBER) and Postmates have filed a suit against the state of California regarding its controversial “gig worker” bill.

Uber oppose gig worker law

The controversial law reclassifies most contracts workers as employees instead of independent contractors. The law which targets app-based firms such as Uber and Lyft (NASDAQ: LYFT) requires the companies to treat their drivers as employees entitled to minimum wage and other benefits.

However, the companies have opposed the law, and on Monday, they filed a lawsuit in Federal Court in Los Angeles. According to the suit, the AB-5 statute goes against several aspects of the California and US constitutions. The lawsuit indicates that AB-5 is an incoherent and vague statute that fails to address what its sponsors envisioned it to achieve.

The AB-5 statute that went into effect on January 1, 2020, requires the companies to treat their workers who perfume work that is part of their core business as employees. However, the companies are claiming that such a move will limit them from using many workers going forward.

Bill sponsor accuses Uber of trying to exempt itself from the law

Despite the outcry from the companies, proponents of the law indicate that this is one way of protecting workers. They indicate that it will ensure that employees eligible for benefits like health insurance, paid sick days and minimum wage receive those benefits. The sponsor of the bill Lorena Gonzalez criticized the move by Uber to go to court, terming it a way of avoiding the impact of legislation.

Gonzalez said that Uber has a culture of circumventing regulations, and they can do anything to exempt themselves from the legislation. She added that Uber exploits its drivers as its executives continue to rack billions.

In a statement, Postmates indicated that it was not trying to exempt itself from the laws. It, however, indicated that they are just determined to differentiate who is a contractor and who is an employee. The statement added that California had failed to respond to the big question regarding the future of workers and work in the changing economy.

Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

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