Uber, Lyft shares rally after US agency says drivers are contractors

Uber, Lyft shares rally after US agency says drivers are contractors

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2 -min read
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[NEW YORK] Newly public ride-hailing companies Uber Technologies and Lyft shares gained for a second day after a US government agency said drivers providing rides with Uber were independent 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.

Mr 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 US Circuit Court of Appeals will reverse course," he wrote in a note.

The National Labor Relations Board of the US 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 per cent on Wednesday, after closing up 7.7 per cent on Tuesday.

Lyft's stock rose as much as 7 per cent, continuing its gains after closing up 4.9 per cent on Tuesday.

 

BLOOMBERG