Lyft and Uber Shares Move Higher After Court Said This

Shares of ride hailing companies Lyft and Uber were heading higher in Monday’s trading session as both stocks bounced after falling this past Friday.

It was on Friday that Wall Street learned that Alameda County Superior Court Judge Frank Roesch wrote in a ruling that Proposition 22 is unconstitutional.

According to Roesch, the Proposition, “limits the power of a future Legislature to define app-based drivers as workers subject to workers’ compensation law.” Roesch said this “makes the entire ballot measure “unenforceable.”

Shares of Lyft and Uber started Monday in a slump after the California court ruled the ballot measure, which exempted gig workers from state labor law, was unconstitutional.

California voters approved Proposition 22 by a majority vote this past November. The ballot measure effectively exempted several gig economy companies from the state’s recently enacted law, Assembly Bill 5, which had aimed to make their workers into full-time employees.

Prop 22 proposed workers remain contractors, and be entitled to certain benefits and protections, like minimum earnings.

Lyft, Uber, Instacart and DoorDash and others had spent more than $200 million to support the ballot in an effort to maintain their current business models.

By classifying drivers as contractors, it lets the companies avoid the costly benefits associated with employment, such as unemployment insurance.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.