Judge stalls Uber, Postmates challenge to California job law
The companies are among those pushing for a November ballot measure that would exempt them while giving drivers new benefits
Uber CEO Dara Khosrowshahi says on the earnings call he expects the company to be profitable on an adjusted basis in late 2020, instead of in 2021.
When is a worker considered an employee?
Independent contractors were front and center in a California courtroom on Monday.
A federal judge refused to exempt ride-hailing company Uber and on-demand meal delivery service Postmates from a broad new California labor law while she considers their lawsuit.
U.S. District Judge Dolly Gee in Los Angeles denied the companies' request for a preliminary injunction protecting them from the law aimed at giving wage and benefit protections to people who work as independent contractors.
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The companies contend that the law that took effect Jan. 1 violates federal and state constitutional guarantees of equal protection and due process.
It created the nation's strictest test by which workers must be considered employees, which could set a precedent for other states.
Uber said it is considering whether to appeal.
The two companies are among those pushing for a November ballot measure that would exempt them while giving drivers new benefits like health care and an earnings guarantee of 120 percent of minimum wage.
CALIFORNIA BILL REQUIRING COMPANIES TO TREAT GIG WORKERS AS EMPLOYEES ADVANCES
The lawsuit argues that the law exempts some industries but includes ride-hail and delivery companies without a rational basis for distinguishing between them.
It says that the law also infringes on workers' rights to choose how they make a living and could void their existing contracts.
Gee rejected all those arguments.
CALIFORNIA TAKES LEAD ON LAWS AFFECTING GIG ECONOMY, PRIVACY
The judge agreed that there is evidence that the law “targeted” the companies and that some state lawmakers “specifically complained about Uber.”
"But such targeting, even if it rises to the level of animus toward gig economy companies, does not establish an Equal Protection violation," Gee wrote, given that the law also “addresses legitimate concerns” about the harmful misclassification of workers “in many industries, not just the gig economy.”
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The law is intended to extend employee rights to more than a million California workers who lack benefits like a minimum wage, mileage reimbursements, paid sick leave, medical coverage and disability pay for on-the-job injuries.
The Associated Press contributed to this article.