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Uber, Postmates Sue California Calling Gig Law Unconstitutional

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Ride-hailing company Uber Technologies Inc has teamed with courier services provider Postmates Inc. to sue California challenging the constitutionality of a new law, known as Assembly Bill 5, or AB5, targeting gig economy companies. The new law is set to take effect in the New Year, on Wednesday.

Uber and Postmates along with two app-based drivers filed the lawsuit in Los Angeles federal court against the state and its attorney general, Xavier Becerra. They demand to block the AB5 worker-protection bill that would force the companies like Uber and Lyft to treat their drivers as employees, arguing that it violates the U.S. Constitution.

The AB5 law, which was signed by California Governor Gavin Newsom in September, would require the companies to classify the contractors as employees, offering higher pay and other benefits such as medical insurance.

The bill is said to hurt the gig economy business model of technology platforms, such as Uber, Postmates, Lyft Inc, and DoorDash, who mainly use contract workers for ride-hailing or food delivery services.

Labor groups and other supporters of the bill, including labour union The Teamsters, noted that it protects workers' rights. Meanwhile, Miguel Perez, a named plaintiff in the suit, said he challenged the law as it threatens his freedom and flexibility to be independent worker who sets own working hours.

The suit by Uber and Postmates alleges that the law was irrational, vague and incoherent, and called AB5 a thinly veiled attempt to target and harm gig economy businesses. They argue that targeting app-based workers violates constitutional guarantees of equal protection and due process.

The office of California Attorney General is reviewing the complaint.

Meanwhile, The Teamsters said the union objects the latest suit challenging the constitutionality of AB-5. Ron Herrera, secretary-treasurer of Teamsters Local 396 and Teamsters International vice president, urged the union and the broader American Labor Movement to use all of the resources at their disposal to ensure that AB-5 is protected and that workers have a voice at the table.

Since its introduction, AB5 has faced legal challenges. In mid- November, the California Trucking Association had filed a lawsuit arguing that the bill violates federal law and would deprive more than 70,000 independent truckers of their ability to work.

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