Uber, Postmates sue CA to block AB-5, 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
Context & Ripple Effects
This lawsuit is the legal front of a war the platforms had already opened at the ballot box. After AB-5 passed, Uber and Lyft pledged $60M for a ballot measure declaring their drivers non-employees, and a driver group launched its own initiative to preserve contractor classification. Suing California days before the law takes effect extends that strategy into federal court.
The timing matters: with AB-5 about to qualify many contractors for employment benefits, Uber and Postmates are arguing the law unconstitutionally singles out gig companies while exempting other industries — a framing aimed at invalidating the statute wholesale rather than complying with it.
First-order effects
- California drivers for Uber and Postmates stay contractors for now if the suit stalls enforcement, postponing the employment benefits AB-5 was written to extend to them.
- Postmates, already bleeding cash per its SEC filings, avoids an immediate reclassification cost burden that rivals like Lyft and DoorDash would also have faced in-state.
Second-order effects
- A court loss pushes the fight back to the ballot measure track the companies funded, culminating in the roughly $200M Prop 22 campaign that ultimately exempted Uber, Lyft, DoorDash, and others from reclassification.
- Uber simultaneously gamed the classification question from the product side, adding features like favoritable drivers in California as apparent evidence of independence — app-level changes becoming legal exhibits.
Third-order effects
- If the pattern holds, labor-law disputes over gig work get settled by expensive direct-democracy campaigns and constitutional challenges rather than statutory compliance, letting the best-funded platforms write their own exemptions.
- Other states eyeing AB-5-style legislation now price in a two-front response — litigation plus a counter-ballot measure — raising the cost of reclassification bills nationwide.
The trend: Gig platforms are converting worker-classification defeats in legislatures into wins at the ballot box and in court, spending hundreds of millions to keep contractor models intact.