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Investing.com – Uber (NYSE:UBER), Lyft (NASDAQ:LYFT) and DoorDash (NYSE:DASH) stocks fell in Monday’s premarket trading, after a judge in California struck down a ballot outcome that declared drivers for the companies were independent contractors.
Lyft stock fell 4.4%, Uber stock fell 3.7% and DoorDash stock a relatively modest 0.6%.
Proposition 22, passed in a statewide vote in November and bankrolled by Uber, Lyft and others, exempts the gig economy businesses from a law requiring more companies to register workers as employees and provide them with benefits such as statutory sick leave and vacation.
Companies are typically not required to pay those benefits to independent contractors.
The ruling threatens to raise the companies’ operating expenses at a time when they are still far from sustainable profitability at an operating level, despite a recent improvement in their performance as the U.S. economy reopened in the spring.
The judge sided with three drivers and the Service Employees International Union in a lawsuit that argued the measure improperly removed the state legislature’s ability to grant workers the right to access to the state workers’ compensation program.
Uber said it plans to appeal against the order.
