California is known for its progressive, controversial laws. However, September saw the passage of one of the more problematic laws in recent memory. Known as AB5, the new legislation aims to protect gig workers like those making money from companies like Uber, Lyft, DoorDash, and more.
However, it is clear that it isn’t a perfect solution. Both gig workers and the companies paying them are furious about the complications caused by AB5. Now, Uber has officially filed a lawsuit against the state of California. It alleges that the new legislation is unconstitutional. Whether or not the rideshare company’s case will be taken seriously remains to be seen.
Concerns About AB5
The problem with California’s new gig worker law is that it actually is intended to do some good. Those who work for companies like Uber are often left to fend for their own expenses like car repairs and gas. They also don’t get employee benefits like health insurance, paid sick days, or overtime.
AB5 will force these companies to reclassify their workers as employees. This will require them to pay out the benefits listed above. On the surface that seems good for workers.
However, AB5 has the potential to radically disrupt the currently booming gig economy. Uber has already said that the changes will force it to cut drivers from its programs, limit the number of hours they can work, and alter payment structures to accommodate the new expenses.
For gig workers, that is a nightmare. The very law seeking to protect them could be their downfall. To make matters worse, AB5 doesn’t just affect rideshare drivers. Individuals like freelancers and delivery drivers may also be placed under increased scrutiny. For example, Vox Media has already started planning to terminate its relationships with California-based freelance writers due to the new legislation. In all, more than one million workers will be affected by AB5.
Uber is Fighting Back
On Monday, Uber filed its lawsuit against California in a Los Angeles federal court. It takes aim at the seemingly random exemptions made by AB5 for workers like salespeople, travel agents, construction truck drivers, and more than a dozen other occupations. The complaint says, “There is no rhyme or reason to these nonsensical exemptions, and some are so ill-defined or entirely undefined that it is impossible to discern what they include or exclude.”
Interestingly, Postmates, a food delivery startup, is also listed as a plaintiff on the lawsuit. It claims that the law threatens workers of the on-demand gig economy and treats them unfairly compared to traditional employees.
Indeed, AB5 could be very damaging to gig workers if it isn’t stopped by Uber’s lawsuit. Currently, the legislation will go into effect on January 1, 2020.
Companies will be forced to use a three-pronged test to determine if their workers should be classified as employees or contractors. This includes looking at things like uniform expectations and whether or not company equipment is used.
The entire point of gig work is that people do it for the flexibility it provides. By turning these workers into employees, AB5 strips that flexibility away. Most gig workers would say that not having employee benefits is worth the trade-off of working when and how they want to.
For that reason, Uber’s lawsuit might stand a chance. However, a lengthy legal fight for the future of AB5 and the gig economy seems unavoidable.