A new gig-economy labour law by California has led ride-hailing giant Uber and delivery company Postmates to file a lawsuit against the state. Once the legislation comes into effect on January 1, under certain conditions independent contractors will be classified as employees and granted the minimum salary and health insurance benefits that entail. This is the very reason for trouble for both Uber and Postmates and it will involve the drivers and employees as well.
The lawsuit filed on December 30 read: "Plaintiffs bring this lawsuit to protect their constitutional rights and defend their fundamental liberty to pursue their chosen work as independent service providers and technology companies in the on-demand economy".
Uber has strongly opposed any change of status for its drivers last year as it will cost the company extra in social security costs. Both Uber and its co-plaintiffs reportedly argued that the law targets independent service providers while exempting direct salespeople, travel agents, construction truck drivers, and commercial fishermen. There is no rhyme or reason to the exemptions, they quoted. The gig economy has given drivers "opportunities to earn money when and where they want, with unprecedented independence and flexibility," the plaintiffs said.
Amongst the law and counter lawsuits, drivers are divided between those who want the same security as employees and those who want the flexibility of being able to choose the hours they work. Besides joining with Postmates, Uber and its American rival Lyft have each put aside 30 million dollars to organise a referendum, allowed under Californian law, to replace the legislation with a compromise on social rights that have been put before the state Governor. Uber currently provides commission-based bookings to its drivers on a pure freelance basis.