Gig Economy Update
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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 the ruling will not take effect while Uber and others, including the California Attorney General, appeal.
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 appease investors before Monday morning.
Uber, Lyft and DoorDash’s stocks were basically flat before midday, with Uber recovering the strongest, rising more than 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 valid, 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, it is a direct attack on Dasher’s independence. It is untenable.”
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.”
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 election campaign 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.
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: “The court held that the entire content of Proposal 22 cannot be enforced.”
The case was brought by three drivers supported by the International Service Employees Union. “For two years, drivers have been saying that democracy cannot be bought. Today’s decision shows that they are right,” said Bob Schoonover, chairman of the SEIU California State Assembly.