Via Financial Times

Uber has failed in an attempt to block a new Californian law that seeks to give gig economy workers stronger employment rights.

A judge in Los Angeles disagreed with Uber’s claim that it and delivery company Postmates, a co-plaintiff, were being unfairly targeted by Assembly Bill 5, which came into force at the start of the year.

The companies had sought a preliminary injunction preventing AB5’s enforcement while it is being challenged in the courts.

The law applies a higher bar for companies seeking to treat workers as independent contractors rather than employees, a status that would require additional benefits, such as sick pay.

The law, if replicated around the US, poses an existential threat to the business model of gig economy companies, which rely heavily on minimal staffing costs to operate.

In court filings, Uber and Postmates referred to studies suggesting reclassifying employees could add at least 20 per cent to their labour costs, and would result in fewer drivers on the platforms.

The companies said the gig economy had been singled out by California assemblywoman Lorena Gonzalez, who authored the bill, pointing to posts on Twitter where she criticised Uber and similar groups. 

The law violated the principle of “equal protection”, they said, because several other industries — such as dentists, lawyers and manicurists — were given exemptions, with others likely to be added soon. 

Judge Dolly Gee dismissed the concerns. In her ruling, published on Monday, she wrote that Uber and Postmates had not done enough to demonstrate unfair treatment, nor did they successfully argue that the law would prevent workers from being free to “pursue their chosen occupations as their own bosses”.

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The decision was celebrated by workers’ rights organisations. “You love to see it,” said the California Labor Federation, on Twitter.

In a statement, Ms Gonzalez said: “It is now the responsibility of California to enforce the law on behalf of these workers.”

Uber and Postmates said they were considering whether to appeal.

Uber has previously said it was confident it passed the requirements outlined in AB5 — known as the “ABC test” — but had nonetheless sought to have enforcement on the law blocked, calling it unconstitutional.

Uber said: “State legislators had the opportunity to expand benefits for hundreds of thousands of independent workers in California, a step Uber has been advocating for and one that other states already have taken.

“Instead, they passed AB5 using a biased and overtly political process that ignored the voices of the workers most affected by the law and granted preferential treatment to an arbitrary group of industries.”

Postmates said it remained “committed to the modernisation of worker classification”. 

Uber, Postmates and a handful of other gig economy companies have pooled more than $100m to back a new ballot measure that would change AB5. In it, they suggest a minimum wage, and an openness to some degree of worker organisation and representation.

Other critics of the law include the American Society of Journalists and Authors, and the National Press Photographers Association. The organisations have sued the State of California, arguing the law would limit the work of freelance journalists, writers and photographers — and was therefore an attack on freedom of speech.

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