Lyft president ‘extremely confident’ company will win legal battle to classify gig workers as contractors

Lyft President John Zimmer instructed CNBC’s Jim Cramer on Monday he’s assured the ride-hailing firm will overcome the most recent authorized impediment that threatens its working mannequin.

The latest hurdle got here Friday, when a California judge ruled against a ballot measure authorized final yr by voters within the state often called Proposition 22. It exempted drivers for firms like Uber and Lyft, as properly food-delivery companies, from California labor legislation that attempted to make sure they have been categorized as workers, not unbiased contractors.

The decide, Alameda County Superior Court docket Choose Frank Roesch, wrote in his ruling that Proposition 22 violates California’s state structure as a result of “it limits the ability of a future Legislature to outline app-based drivers as staff topic to staff’ compensation legislation.” In consequence, Roesch contended, the complete poll measure can’t be enforced.

Defend App-Based mostly Drivers and Providers Coalition, which backs Preposition 22, instructed Reuters it’s interesting Roesch’s choice.

“As this goes to greater courts, the enchantment courtroom in California, we’re extraordinarily assured that the proposition can be upheld,” Zimmer, who additionally co-founded Lyft, mentioned in an interview Monday on “Mad Money.”

Lyft, Uber and different companies within the so-called gig financial system corresponding to DoorDash spent millions of dollars in favor of the preliminary poll measure, which in November handed with nearly 59% of California voters supporting it.

The businesses had warned that classifying drivers as workers would result in greater working prices — corresponding to needing to pay into unemployment insurance coverage — that might, in flip, be handed onto shoppers by worth will increase for companies.

Lyft and Uber have struggled to persistently obtain profitability all through their histories, however each try to get there. Traders are in search of progress on these targets, which might be difficult by needing to regulate their enterprise fashions on driver classification.

Because of Roesch’s ruling Friday, although, Zimmer mentioned there can be “no change” to Lyft’s operations in California.

Requested by Cramer if Lyft anticipated to have progress on the enchantment inside roughly six months, Zimmer responded: “It is arduous to foretell authorized processes totally, however we’re optimistic that inside that timeframe we’ll get a extra ultimate decision.”

Lyft shares rose nearly 3% Monday, ending at $47.24 apiece. Uber additionally closed greater for the session, advancing 2.6% to $41 per share.

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