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Uber lawsuit to curb contract worker rights rejected

By Yana Berman

California judge throws out lawsuit from Uber and Postmates, but company will continue with legal action to block gig economy workers from greater working rights

A California judge has rejected a lawsuit filed by the ride-sharing app Uber and delivery start-up Postmates. The two companies intended to block new legislation that would convert temporary workers and contractors into employees.

According to Reuters, US district judge Dolly Gee concluded that the potential risk to the companies was less important than a general need to establish a living wage and regulate employment in the state.

Although both Uber and Postmates, which are heavily relying on the temporary workforce, had proven they could suffer a degree of irreparable harm due to the law, they will be unable to prevent it from coming into effect.

However, Gee's decision does not stop the lawsuit, as she did not rule on the merits.

Both Uber and Postmates announced they were awaiting for pursuing the case on its merits. The Californian companies are considering all legal options, including an appeal.

Assembly Bill 5 (AB5), dedicated to the so-called gig economy that mostly depends on contract workers, came into effect on January 1. According to the law, the companies that refuse to treat part-time workers as regular employees with wages and sick leaves could face significant penalties. Some major Californian startups, including Lyft and DoorDash, could be affected by the bill. However, no enforcement has taken place so far.

Shortly after the bill was passed, Uber called it “biased and overtly political,” as it grants preferential treatment to several industries. Together with Postmates, the company filed a lawsuit against the US state of California in late 2019.

Uber stock was down 1.53 per cent at the close on February 10, when the decision was announced. Postmates is not traded publicly.

FURTHER READING: Gig economy workers trapped in cycle of insecurity, report says

FURTHER READING: Uber to be profitable by end of 2020 says CEO

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