Lyft and Uber took a big hit this weekend after a state judge ruled against a ballot proposition which would have allowed the companies to continue classifying drivers as independent contractors.
A state bill passed in 2019 would have required the companies to treat their workers as employees. That would have entitled drivers to benefits such as workers comp, unemployment, paid sick and family leave, and health insurance.
Because the companies didn’t want to put up with that, they dumped millions into lobbying for Proposition 22. The proposition would have overturned the passed bill, allowing the companies to consider their drivers as independent contractors.
Lyft, Uber, and DoorDash spent over $200 million on the Yes on 22 campaign. And that money worked in convincing the overwhelming majority of Californians to vote yes on the prop. Unfortunately, that money went up in flames after a judge found it was “unenforceable and unconstitutional.” 😲
This court battle will likely rage on in the months ahead. However, in the meantime, the companies will likely have to encumber Californians with higher prices on their rides and deliveries. And this adverse ruling for the companies almost certainly means moves for their stock prices… and not the good kind. 📉