Uber and Lyft drivers are independent contractors, not employees, of the ride-sharing companies, a California court has ruled.
A three-judge panel of the state appeals court decided that a 2021 ballot measure, known as Proposition 22, was unconstitutional.
Proposition 22 exempted ride-share drivers from a 2019 state law known as AB5 that makes it difficult to classify workers as independent contractors rather than employees.
The ruling removes some future regulatory risks for the rideshare companies and potentially allows Lyft, Uber and its peers to sidestep a hit of between $20 million and $170 million to their 2024 core earnings, according to analysts.
That said, the decision is likely to be challenged before the California Supreme Court.
Shares of Uber were up almost 6% on Tuesday afternoon and Lyft had gained almost 2% in New York.
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