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Tension Builds Up for Uber Over California's Gig Worker Law
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Uber Technologies’ (UBER - Free Report) tussle with California over a new gig worker law is escalating with the state planning to ask a judge to compel the former to re-classify its drivers as employees from their current status of independent contractors.
In a filing in the Superior Court of California in San Francisco, lawyers for California Attorney General Xavier Becerra stated that their office would file a request for a preliminary injunction.
The move falls under San Diego Assembly member Lorena Gonzalez’ Assembly Bill 5, the new law requiring majority of independent contractors (with a few excerptions) to be uplifted to traditional shift employees.
Uber, carrying a Zacks Rank #3 (Hold), defended the independent contractor status it provides to its drivers by saying that most of its drivers prefer the independence of working as contractors. It added that more than 158,000 Uber drivers in California would lose their jobs if the reclassification occurred.
Earlier in May, California sued Uber and its rival Lyft (LYFT - Free Report) , carrying a Zacks Rank #3, for illegally classifying drivers as independent contractors. With things having escalated, Lyft is also under pressure. In the event of a preliminary injunction being ordered, both companies would be forced to pay worker benefits among other protections while the legal battle proceeds. Under the current scenario, Uber and Lyft are not entitled to pay drivers for overtime, or give healthcare, unemployment and workers' compensation.
Hence, classifying drivers as full-time employees would inevitably raise labor costs for these companies. Moreover, the companies had said that the law would reduce the number of drivers and deter flexibility to set their hours.
California’s argument is that the lack of benefits of drivers due to their contractor status makes them turn to government-funded income support programs, which in turn burdens taxpayers.
In a counter move, Uber, Lyft and DoorDash have funded a November ballot initiative that would exempt businesses of similar nature from complying with the new California law.
Both these stocks have an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Tension Builds Up for Uber Over California's Gig Worker Law
Uber Technologies’ (UBER - Free Report) tussle with California over a new gig worker law is escalating with the state planning to ask a judge to compel the former to re-classify its drivers as employees from their current status of independent contractors.
In a filing in the Superior Court of California in San Francisco, lawyers for California Attorney General Xavier Becerra stated that their office would file a request for a preliminary injunction.
The move falls under San Diego Assembly member Lorena Gonzalez’ Assembly Bill 5, the new law requiring majority of independent contractors (with a few excerptions) to be uplifted to traditional shift employees.
Uber, carrying a Zacks Rank #3 (Hold), defended the independent contractor status it provides to its drivers by saying that most of its drivers prefer the independence of working as contractors. It added that more than 158,000 Uber drivers in California would lose their jobs if the reclassification occurred.
Earlier in May, California sued Uber and its rival Lyft (LYFT - Free Report) , carrying a Zacks Rank #3, for illegally classifying drivers as independent contractors. With things having escalated, Lyft is also under pressure. In the event of a preliminary injunction being ordered, both companies would be forced to pay worker benefits among other protections while the legal battle proceeds. Under the current scenario, Uber and Lyft are not entitled to pay drivers for overtime, or give healthcare, unemployment and workers' compensation.
Hence, classifying drivers as full-time employees would inevitably raise labor costs for these companies. Moreover, the companies had said that the law would reduce the number of drivers and deter flexibility to set their hours.
California’s argument is that the lack of benefits of drivers due to their contractor status makes them turn to government-funded income support programs, which in turn burdens taxpayers.
In a counter move, Uber, Lyft and DoorDash have funded a November ballot initiative that would exempt businesses of similar nature from complying with the new California law.
Key Picks
Some better-ranked stocks in the Internet - Services industry are Zscaler Inc (ZS - Free Report) and Dropbox, Inc. (DBX - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Both these stocks have an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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