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Chronicles

The story behind the story

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Uber, Postmates sue CA to block AB5, days ahead of bill taking effect, say law unconstitutionally targets gig economy companies and benefits other industries

- Companies call labor rights measure unfair, unconstitutional  — A.B. 5 will qualify many contractors for employment benefits

Bloomberg

Context & Ripple Effects

California's AB5 fight has escalated in stages: Uber and Lyft first pledged $60M for a ballot measure declaring their drivers non-employees if the bill passed, then a driver group launched its own ballot initiative to preserve contractor status after the bill cleared the legislature. With AB5 days from taking effect, Uber and Postmates are now taking the direct route — a lawsuit arguing the law unconstitutionally singles out gig economy companies while exempting other industries that use contractors.

First-order effects

  • Uber and Postmates face immediate reclassification exposure in California once AB5 takes effect, with many current contractors qualifying for employment benefits unless the suit blocks or delays enforcement.
  • The litigation puts the companies' equal-protection argument on the record before any court ruling, buying time while the classification question stays unresolved.

Second-order effects

  • Uber is already shaping product behavior around the legal theory — within a week of AB5 taking effect it added California features like letting riders favorite drivers, an apparent bid to evidence driver independence (per the Washington Post coverage).
  • The courtroom strategy stacks on top of the ballot strategy: Uber, Lyft, DoorDash, and Postmates went on to spend roughly $200M backing Proposition 22, which ultimately exempted them from reclassification (voters sided with the platforms in November 2020).

Third-order effects

  • If the pattern holds, gig-work classification disputes stop being settled by legislatures or courts alone and become standing referendum campaigns that only the largest platforms can afford to wage — entrenching incumbents and raising the barrier for new entrants.
  • A win on the 'unfairly targets gig companies' argument would push other contractor-heavy industries toward similar carve-out lobbying, fragmenting employment law by sector rather than by worker role.

The trend: Gig-economy labor classification is being fought as a multi-front campaign — legislation, litigation, and ballot measures — with platform spending, not case law, increasingly deciding the outcome.

Discussion

  • @carnage4life Dare Obasanjo on x
    In thinking about laws like #AB5, I wonder what economic modeling was done. E.g 1. Impact of people having to choose to become full time Lyft/Uber drivers or quitting 2. Job loss versus gain among freelance journalists All I've seen is anti-tech propaganda https://www.bloomberg.c…
  • @sozh Sam-Omar Hall on x
    So Uber and Postmates are suing the state of California over a new law that would force them to treat their workers as employees. But that's not what this tweet is about. The lawsuit mentions the BABY NINTH AMENDMENT and I am shook https://www.latimes.com/... story-@JMBooyah pic…
  • @gregbensinger @gregbensinger on x
    But I thought Uber was not going to fall under the three-part test and that contractors are doing work “outside the usual course” of Uber's business https://www.wsj.com/...
  • @yoda Drew Olanoff on x
    “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,” according to the complaint. https://twitter.com/...
  • @leimer Bradley Leimer on x
    Uber, Postmates Sue California to Block Gig-Worker Law https://www.bloomberg.com/... “The one clear thing we know about Uber is they will do anything to try to exempt themselves from state regulations that make us all safer and their driver employees self-sufficient”
  • @veenadubal Veena Dubal on x
    The lawsuit, as ⁦@CharlotteGarden⁩ comments, is likely dead on arrival. And beyond that, it creates tremendous public ill will towards these greedy labor platform companies. It will backfire. https://www.bloomberg.com/...