DASH - Uber Lyft and DASH notched higher as California court classifies drivers as contractors

2023-03-14 03:55:06 ET

Ride-sharing and delivery apps, Uber ( UBER ), Lyft ( LYFT ) and DoorDash ( DASH ) can now continue to treat their drivers as independent contractors after California court reversed lower-court decision on Monday.

In November 2020, California voters approved Proposition 22 that allowed the ride-sharing apps to classify drivers as independent contractors rather than employees.

However, the battle over Proposition 22 is not over as the Services Employees International Union (SEIU) filed a lawsuit in early 2021 and is expected to appeal the decision to the California Supreme Court. The higher courts will take several months and till that time Prop 22 remains in place. “Every California voter should be concerned about corporations’ growing influence in our democracy and their ability to spend millions of dollars to deceive voters and buy themselves laws,” David Huerta, the president of SEIU California, said in a statement.

Uber ( UBER ) and Lyft ( LYFT ) shares moved higher, up 5% , and DoorDash ( DASH ) up 4% during after hours of trading. Uber and other companies have are of opinion that drivers value the flexibility of being an independent contractor, sans fixed hours from an employer, and say they would have to give up such freedom if they were employees.

Labor unions and their allies bargain for better working conditions, health care and employment benefits and argue that the drivers could maintain flexibility under a traditional employment model.

“Today the Appeals Court chose to stand with powerful corporations over working people, allowing companies to buy their way out of our state’s labor laws and undermine our state constitution. Our system is broken. It would be an understatement to say we are disappointed by this decision.” said Lorena Gonzalez Fletcher, leader of the California Labor Federation and a former state assemblywoman.

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