(Bloomberg) -- Uber Technologies Inc. and Lyft Inc. jumped in U.S. premarket trading Wednesday after California voters approved a measure to protect the companies’ business models from efforts to reclassify their drivers in the state as employees.
Uber shares jumped 14% while Lyft rose 15% premarket following the passage of Proposition 22, an initiative crafted and bankrolled by gig-economy companies to exempt their workers from a new law designed to give them employee benefits.
The ballot measure in their home state was the costliest in California history. Uber and Lyft, along with venture-backed food delivery companies DoorDash Inc., Instacart Inc. and Postmates Inc., contributed about $200 million to fund “Yes on 22.” Labor unions and other opponents raised only about $20 million.
The reaction from investors Wednesday reflects not just the stakes in California but also expectations of what will happen elsewhere. Officials in New York, Illinois and other states have also considered bolstering labor protections in the gig economy.
“This could be seen as a shot across the bow,” said Sharon Block, executive director of the Labor and Worklife Program at Harvard Law School. “Everybody’s looking at California.”Under the new law, gig companies have agreed to provide some new protections to California workers, including a guaranteed wage for time spent driving and a health insurance stipend, but does not include paid sick leave, unemployment insurance and other standard protections afforded under California labor laws.
Uber is scheduled to release quarterly financial results on Thursday, and Lyft reports Nov. 10.
©2020 Bloomberg L.P.