Uber Technologies Inc (NYSE:UBER) and Lyft Inc (NASDAQ:LYFT) scored a minor victory on Thursday after a California state appeal court overruled a lower court ruling that would have forced the companies to reclassify drivers as employees.
Investors are now left wondering if the victory is temporary or the two ride-hailing companies will ultimately emerge victorious.
The Right Soundbites: Uber CEO Dara Khosrowshahi is leading the initiative against the state's ruling and is going on media outlets with the right "soundbites," FullCycle founder Ibrahim Alhusseini said on CNBC. The CEO is really emphasizing the key points to the public, including the fact that classifying 50,000 drivers as full-time employees is a process that would normally take a year to complete.
Uber also has many fellow app-based gig economy platforms in its corner, including DoorDash, Postmates, Instacart, among others. The community is united in their desire to see Proposition 22 passed in November. This would create a new classification of drivers that offer additional benefits but keeps the flexibility associated with being independent.
Not The First Battle: Uber faced a similar legal battle in New York City when Mayor Bill de Blasio wanted to place a cap on the number of drivers that can operate in the city, former Uber executive Emil Michael said on CNBC. At the earliest sign of a potential battle, Uber went on the offensive and emphasized how it's on the side of the people.
"We were fighting a government that was insensitive of the needs of their citizens," he said.
Similarly, a recent poll from industry insider "The Rideshare Guy" found 70% of drivers don't want to be considered employees, Michael said. Similar to New York City, Uber is now on the "right side" of the public debate.