A judge in California announced on Monday a preliminary injunction that would stop Uber and Lyft from classifying their drivers as self-employed, and potentially set the stage for a major shift in their business models.
Judge Ethan Schulman of San Francisco Superior Court granted a stay of 10 days before the preliminary injunction takes effect. Once the order is placed, Uber and Lyft may be required to reclassify drivers as employees who are eligible for certain benefits and protection, rather than as contractors who work for themselves.
Judge Schulman reports that Uber and Lyft use “circular” reasoning in arguing that their tech developers are employees while their drivers are not.
“If this reasoning were accepted, the rapidly expanding majority of the industry, which relies heavily on technology, could with impunity decipher legions of workers from the basic protection afforded to workers by state labor and employment laws,” Schulman wrote. in order. “To put it bluntly, drivers are central, not tangential, to the entire Uber and Lyft business.”
The companies are likely to appeal the order.
But if this sequence continues, it could be the “death knell” for Uber, says Jim Cramer.
You can follow Jim Cramer and Katherine Ross on Twitter at @JimCramer en @byKatherineRoss. Read more from Katherine Ross here.
