Uber and Lyft drivers in California will remain independent, a move that ends a stalemate following the state law that threatened ride-hailing firms to classify workers as employees, according to The New York Times. The move comes after voters in the state overwhelmingly passed Proposition 22, which allows gig economy companies to treat their workers as independent contractors. 

  • Although lawsuits against Uber and Lyft will continue, Proposition 22 will reduce its scope, and the state will continue pushing for penalties for the period the ride-hailing firms flouted the law. 
  • Uber and Lyft are expected to pursue federal legislation to protect them from similar employment laws in other states.
  • “Prop. 22 represents the future of work in an increasingly technologically-driven economy,” Geoff Vetter, Proposition 22 campaign spokesman. 
  • Uber and Lyft argued that they were primarily technology, not transportation companies, and should not be subject to burdensome licensing, safety checks, and employment requirements. 
  • The passage of Proposition 22 is a blow to state and local officials who viewed the ride-hailing firms as labor and other laws defiant.

Uber gained 3% on Tuesday while Lyft stock was up 7% after polls. UBER: NYSE is currently up 11.74%, LYFT: NASDAQ is currently up 10.43%