Know all facts on why Uber sues AB 5 in a California federal court: Uber sues AB 5 in a California federal court as unconstitutional and unfair to the workers of the on-demand economy. The new law, for the first time, reclassifies gig economy workers as employees instead of contractors. It is to come into effect from tomorrow, January 1, 2020.
Uber, Lyft, Postmates, and many other on-demand service companies were treating their drivers as contractors rather than employees. Due to it, the workers will not get their health insurance, paid sick days, overtime, and other such benefits as regular employees. Also, they have to pay for their cars, gas, maintenance, and even their insurance. For long, many drivers were worried that the system is leading to their exploitation.
In September, Californian Governor Gavin Newsom signed the AB 5 or the Assembly Bill 5 to reclassify the workers of the gig economy to employees. Now from January 1, it is going to be active across California. Since more than 9 % of the Uber business comes from its home state California, the law could affect its financials severely. Hence Uber, two of its drivers, and another gig economy company Postmates are plaintiffs in this lawsuit filed in US District Court.