Uber, Lyft stocks rise as California court upholds Prop. 22
Yahoo Finance’s Daniel Howley joins the Live show to discuss the rise in stock for rideshare giants Uber and Lyft following a California court’s decision to uphold Prop. 22.
RACHELLE AKUFFO: And staying in tech, we're also hearing that Uber and Lyft also scored a major victory in California.
DAN HOWLEY: That's right, they won their latest court battle over Proposition 22. Previously, the proposition, which was voted on and approved by voters by 58%, was overturned in an appeal. And now, Uber and Lyft are seeing that will eventually be overturned.
And so effectively what this means is that the companies will continue to be able to refer to drivers as gig workers, not employees. They'll receive limited benefits, but not what full-time employees would have. Previously, a judge had said, look, we have to throw out all of Prop 22. It just doesn't work constitutionally. But now, a three-judge panel had said, no, we can leave it in place. There's only certain aspects of it that need to be pulled.
I don't expect this to be the last you'll hear of it, though. It's expected to go all the way to the California Supreme Court. And this is really something where, you know, drivers, driver unions say that Uber and Lyft, as well as other gig worker companies, are really just essentially taking advantage of them. And they say that they're not getting their fair share.
Uber, Lyft, the other gig-worker, gig-economy companies, though, they say that, you know, this is a means for workers to get paid and work on their own schedule, rather than have to be-- to abide by a more formal kind of work setup. And so you're gonna continue to see this kind of back and forth.
I don't expect it's going to end anytime soon. There are other states where Uber and Lyft are working to try to push this kind of legislation forward. So we'll have to see how California shakes out before we see what other states end up doing.
RACHELLE AKUFFO: So if this had gone differently in California then, what would have been the outcome for these gig workers?
DAN HOWLEY: Yeah, they would have been considered regular employees, right? They would have gotten firm benefits. They would have gotten sick pay. They would have gotten full medical, you know, whatever an employee of any other business would have needed or been assured under California law. And so now they're not getting that. They're getting a kind of a, you know, obviously, a cut-back version of that.
They don't get the kind of sick pay that they may get in California. No guaranteed days off that they might get in California. And you know, they may have gotten better pay. Uber and Lyft argue that they would have had to spend millions and millions of dollars trying to rework the system to ensure that they have enough in place to get workers to be full-time employees. And so that's why they don't want to do that.
And also it doesn't hurt that it saves them a good amount of cash, not having to pay into those benefits, as well. And you know, it's one of the largest economies on Earth and especially one of the largest driving communities in the US. It's clear why Uber and Lyft are pushing California so hard, and not in other states.
They've done battle in other states, don't get me wrong, especially in New York where they have been fighting the state there in the city as far as what workers should be paid. But California really has been the big battleground for those companies.