Uber, Postmates sue California over labour law, claiming it as "unconstitutional"

San Francisco-based ride-hailing giant Uber and delivery startup Postmates filed the lawsuit in the US District Court for Central District of California's Western Division in Los Angeles to defend what they called their constitutional rights.

They argued that the state's controversial labour law, known as California Assembly Bill 5 (AB5), which was passed recently, violated the 14th Amendment to the United States Constitution and other national and state laws.

The two companies, supported by two workers who worked for them as an Uber driver and a courier, respectively, alleged that the AB5, which will take effect on Jan 1 next year, restricted their flexibility to classify their workers as independent contractors.

The AB5 was signed into law by California Governor Gavin Newsom in September, which required gig economy companies such as Uber, Lyft and DoorDash to treat their drivers and workers working for app-based on-demand services as employees rather than independent contractors who usually have no equal work benefits granted to full-time employees.

"AB5 is an irrational and unconstitutional statute designed to target and stifle workers and companies in the on-demand economy," said Uber and Postmates in a court file.

They said the law "irreparably harms network companies and app-based independent service providers by denying their constitutional rights."

Uber and Postmates were supported by Lydia Olson and Miguel Perez, who were named as co-plaintiffs in the lawsuit.

Other gig economy companies, including Lyft and DoorDash, have pledged 110 million U.S. dollars to rally support for Uber and Postmates to be exempted from the AB5 on the November 2020 ballot.