Uber and Lyft Shares Set to Get "Super Pumped" After Massive California Supreme Court Ruling...

Goodmorning and happy Saturday!

It looks like Travis Kalanick’s original “super pumped” Uber dream is alive and still kicking. 

(Source: Giphy) 

After years of legal wrangling, and legit yelling at their drivers (iykyk), the California Supreme Court has officially ruled in favor of Uber/Lyft that their gig economy drivers can remain independent contractors. Which is a massive win for these companies. 

(Source: Wall Street Journal) 

To sum up the gist of it: California’s top court gave the thumbs up to Proposition 22 (the 2020 ballot measure that lets Uber and Lyft keep their drivers as contractors) - putting an end to a three-year legal saga where labor unions and some drivers argued that the measure was unconstitutional. 

(Source: SEIU) 

However, in light of California being you know, California, they ruled in favor of big tech. Uber’s reaction? “The will of the nearly 10 million Californians who voted to deliver historic benefits and protections to drivers, while protecting their independence,” they said. Translation: Thanks for letting us keep on cashin’ checks and snappin’ necks.  

(Source: Giphy) 

With that said though, while Proposition 22 isn’t just about keeping drivers as contractors, it actually promises a few benefits for driver as well including, 120% of the minimum wage for hours worked while driving a passenger, health care stipends (if they drive around town more than 15 hours a week), and occupational accident insurance.

(Source: Uber) 

Not bad right? However, critics being critics say these benefits fall short. Drivers only get paid for the time they have passengers in the car. If they’re cruising around waiting for a ride, that’s on their dime… (Which is like, the actual definition of what an independent contractor is?). 

(Source: Giphy) 

In addition, The Service Employees International Union (SEIU) is disappointed while some drivers are giving this ruling more side-eye than your mom when you said you were "studying" at your girlfriend's house. Once the ruling came out, the SEIU’s Tia Orr said, “Gig workers are determined to ensure fairness in the gig economy and won’t stop fighting to win greater workplace rights and protections.”

(Source: SEIU) 

The argument obviously is that gig workers deserve employee status, which would give them access to minimum wage protections, overtime pay, and reimbursements for expenses. Basically, they want the full package, not just the crumbs like mentioned above.

(Source: Giphy) 

But despite the critics, this ruling obviously has Uber and Lyft flying higher than a kite considering they aren’t obligated to standard employee benefits, footing the bill for gas, and tax headaches. Meaning, Uber and Lyft can keep their costs low and margins high, aka good for the companies and it’s investors. 

(Source: Giphy) 

So as we can see, California’s ruling is a big deal, but it’s not the end of the story. This decision could set the tone for gig economy regulations across the country. Washington State, for example, passed a law similar to Prop 22, and Massachusetts recently settled with Uber and Lyft to provide a minimum wage and some benefits. 

(Source: Reuters) 

Plus, even though Uber and Lyft are still facing pushback in other states, this ruling gives them a strong precedent to lean on as they go through more litigation. But even though they have some momentum after winning the first round, the fight is far from over in a nationwide sense. 

So with that said, what’s the takeaway this Saturday? 

Well given that Uber closed -4.59% on the week, with Lyft closing a bit better at -1.21%, the news of this ruling could have a major impact on price going into Monday morning's opening bell. 

(Source: Giphy) 

With some of the uncertainty gone, this ruling is set to be a sigh of relief for investors. But while Uber and Lyft can continue their business as usual (at least in California), it’s a mixed bag for drivers. 

Some obviously like the independent contractor route (who doesn’t like tax write-offs?) while others are not so keen. But in the end, when it comes to the business model that made these two rideshare companies explode onto the scene… it ain’t friggin leavin baby! 

(Source: Giphy 

Stocks.News holds positions in Uber as mentioned in the article.