Uber’s stock price rises because it believes California’s Proposition 22 will be established

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Gig Economy Update

After companies such as Uber expressed confidence in overturning the California judge’s ruling, the stocks of large gig economy groups rebounded on Monday. Recently passed legislation Supported by the industry is “unconstitutional.”

On Friday, a Supreme Court judge in Alameda County, which borders San Francisco and includes the city of Oakland, said that under state law, Proposition 22 is “unenforceable,” which allows gig workers to retain so-called independent contractors. The judge said that while Uber and others, including the California Attorney General, appealed, the ruling would not take effect.

The stock prices of major companies such as Uber and Lyft fell immediately after the decision was made.However, the company guarantees that the ruling will not immediately driver, And believe that the decision will be overturned on appeal, which seems to give investors peace of mind before Monday morning.

Uber, Lyft and DoorDash stocks mostly rebounded before midday, with Uber rising 2.5% and Lyft shares rising 2%. Analysts reiterated their “buy” rating on Uber.

Uber said in a statement that the ruling “disregards the wishes of the vast majority of voters in California, ignoring logic and law.”

It added: “We will appeal and we hope to win. At the same time, Proposition 22 is still in effect, including all the protections and benefits it provides to independent workers across the state.”

A spokesperson for the food delivery app DoorDash said: “This ruling is not only wrong, but a direct attack on Dasher’s independence. It is untenable.”

After gaining the support of 59% of California voters, Proposal No. 22 went into effect in January. This is the subject of a fierce campaign in the gig economy industry. They spent a total of more than $220 million on this work-the most expensive voting measure in the state’s history.

It exempts Gig economy The company does not comply with state laws that require them to give workers full employment rights. Instead, it provides a series of limited benefits, such as medical allowances. Proposal 22 is hailed by the industry as a model of regulation in other regions of the country. Massachusetts is currently pushing for a similar voting measure.

Brad Erickson of Royal Bank of Canada Capital Markets wrote in a report: “We are still fairly certain that lawmakers in California and Washington, D.C., ultimately do not want to make laws that will make people unemployed, and at the same time It also has an adverse effect on them. Consumers; therefore, we are optimistic that such policies are unlikely to be implemented.”

Alameda County Superior Court Judge Frank Roesch stated that the provisions of Proposition 22 are “unconstitutional because it restricts the future legislature’s right to define app-based drivers as workers subject to workers’ compensation laws. “And drew attention to a requirement reached by legislators to require a seven to eight majority to make any amendments.

Therefore, the judge wrote in Friday’s ruling: “The court found that the entire Proposal 22 cannot be enforced.”

The appeal is expected to take at least a few months, during which time California drivers will continue to work in accordance with Proposition 22.

“This is a national agenda that these companies are trying to push across the country,” said Alma Hernandez, executive director of the California Service Employees International Union, which was brought up with three drivers. This case.

“The message here is clear. When you try to vote, buy your own laws and deprive workers of their basic rights, there is a struggle.”

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