Uber, Lyft Rally After U.S. Agency Says Drivers Are Contractors
(Bloomberg) -- Newly public ride-hailing companies Uber Technologies Inc. and Lyft Inc. shares gained for a second day after a U.S. government agency said drivers providing rides with Uber were contractors not employees.
The issue about driver recognition and related compensation has been a key investor concern for Uber and Lyft, representing hundreds of millions of dollars in costs, according to Bloomberg Intelligence analyst Matthew Schettenhelm.
Schettenhelm said he expected Uber to prevail in a case that asks a federal appeals court to decide on the matter under a federal minimum-wage and overtime law later this year. “A lower court ruled for Uber, and we don’t expect the 3rd U.S. Circuit Court of Appeals will reverse course,” he wrote in a note.
The National Labor Relations Board of the U.S. government released a memo on May 14 concluding that drivers with Uber were independent contractors, noting that “drivers’ virtually complete control of their cars, work schedules, and log-in locations, together with their freedom to work for competitors of Uber, provided them with significant entrepreneurial opportunity.”
Uber shares gained as much as 4.3% on Wednesday, after closing up 7.7% on Tuesday. Lyft’s stock rose as much as 7%, continuing its gains after closing up 4.9% yesterday.
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