Uber Technologies Inc (NYSE:UBER) shares are expected to head higher on Tuesday after a US court allowed them and other ride-sharing and deliver app companies like Lyft Inc (NASDAQ:LYFT), DoorDash Inc (NYSE:DASH) and Grubhub to treat their workers as independent contractors rather than employees.
Despite many worker groups opposing the measure for denying them nearly all employee rights, including sick leave, a Californian district court of appeal ruled that the labour proposal known as Proposition 22 was largely constitutional.
This overturned a decision by another California court last year that the initiative violated the state's constitution.
The ride-share companies are now exempted from standards that apply to all other employers, allowing them to ignore certain minimum wage, overtime and worker compensation laws.
It came at some cost to the companies, which together contributed more than US$220mln to the campaign to get voters to pass Proposition 22.
The court opinion said that the legal proposal “does not intrude on the Legislature’s workers’ compensation authority or violate the single-subject rule”.
In a statement, Uber's legal chief Tony West said: “Today’s ruling is a victory for app-based workers and the millions of Californians who voted for Prop 22. Across the state, drivers and couriers have said they are happy with Prop 22, which affords them new benefits while preserving the unique flexibility of app-based work.”
Grubhub is owned by London- and Amsterdam-listed Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB).