Press "Enter" to skip to content

Shares of Uber, Lyft and Doordash tank after gig law struck down

Shares of Uber, Lyft and Doordash tanked on Monday after a California decide struck down a law permitting the businesses to categorise their employees as contractors moderately than workers.

The law — which was handed by a 2020 poll measure referred to as Proposition 22 after $225 million in spending by Uber, Lyft and different gig corporations — was dominated unconstitutional by an Alameda county Superior Court decide late Friday.

When markets opened Monday, Uber shares have been down 2.3 % at $39.05 and Lyft shares had fallen 3.1 % to $44.48, in keeping with MarketWatch information. Shares of meals supply app Doordash, in the meantime, had tanked 4.2 % to $176.25. 

Uber has vowed to attraction the choice to California’s Supreme Court. Lyft referred a request for remark to the Protect App-Based Drivers & Services Coalition.

“We believe the judge made a serious error by ignoring a century’s worth of case law requiring the courts to guard the voters’ right of initiative,” Geoff Vetter, a spokesman for the group, which has backing from Lyft, Uber, Doordash and Instacart. “This outrageous decision is an affront to the overwhelming majority of California voters who passed Prop 22.”

Shares of Lyft and Uber each tanked on the information {that a} California decide had struck down Proposition 22.
OBYN BECK/AFP through Getty Images

Vetter stated the ride-sharing corporations will file an instantaneous attraction, noting that the decide’s order isn’t binding and shall be instantly stayed upon attraction. Proposition 22 will stay in impact till the attraction course of is full.

Proposition 22 blocks individuals who work for gig apps from receiving full employment standing, decreasing corporations’ labor prices and blocking employees’ entry to sick pay, healthcare and minimal wage, drawing ire from labor activists. Uber, Lyft and different gig corporations have argued that the association affords employees extra flexibility. 

California Superior Court Judge Frank Roesch’s ruling on Friday was made in favor of three drivers and the Service Employees International Union, who claimed in a January lawsuit that the law blocked the state legislature’s capability to grant workers the appropriate to entry the state employees’ compensation program. 

Proposition 22 blocks individuals who work for gig apps from receiving full employment standing, decreasing corporations’ labor prices and blocking employees’ entry to sick pay, healthcare and minimal wage.
ROBYN BECK/AFP through Getty Images

Roesch additionally dominated {that a} provision in Proposition 22 requiring a seven-eighths majority within the state legislature for the law to be overturned was unconstitutional. 

Uber, Lyft, Doordash and different perpetually unprofitable gig corporations that supported Proposition 22 are in for a prolonged and consequential authorized battle, observers say. 

University of California Hastings law professor Veena Dubal told Bloomberg that the shortage of related instances within the court docket report means the result of an attraction is tough to foretell. 

“There’s not a lot of case law here to draw on,” she stated, calling Friday’s ruling an “important first decision in what will end up being a very consequential legal battle.”

Bob Schoonover, president of the SEIU California State Council, praised Friday’s determination. 

“For two years, drivers have been saying that democracy cannot be bought. And today’s decision shows they were right,” he stated.

“This is another head scratcher on Prop 22 that brings back this nightmare situation back into the mix for Uber and Lyft,” stated Wedbush Securities analyst Dan Ives. “While likely it stays just a legal overhang there is a chance this becomes a scenario that changes the game for these Gig companies in California.”