Shares of Uber continued to fluctuate for a week on Thursday, as the Ride shares group failed to alert investors due to regulatory threats, with financial performance saying its profit targets had survived the epidemic.
As the company’s share price plummeted on Wednesday, executives began detailing its earnings call, a long and potentially fulfilling road to protection from the latest threat – this time from the Beadon administration’s labor department.
As markets opened on Thursday, Labor Secretary Marty Walsh lost the combined market value of Uber and rival Lift for more than 20 20 billion a week for the first time. Indicate his intent To look more closely at the classification of workers on the Gig Economy platform
Despite reports of a gradual return to rideshare demand from both companies, the stock has dropped even after reiterating its first-quarter profit target on an integrated EBITDA basis by the end of this year.
“We believe Uber remains in a strong position to navigate any potential challenges in its labor model,” said a comment from analysts at Truist, “although this is an issue that could potentially reduce stocks to near / medium positions.”
Earlier on Wednesday, the Labor Department Withdraw a rule That the Trump administration tried to put pressure on in its last days, which made it easier for businesses to classify their workers as individual contractors, avoided federally mandated rules regarding minimum wages and overtime.
The department said the rule was “in tandem” with the text and purpose of the Fair Labor Standards Act.
“By repealing the Independent Contractor Rules, we will help protect the rights of essential workers and stop the erosion of worker protections, if these rules take effect,” Walsh said in a statement.
He added, “Often, workers lose significant wages and related protections if they incorrectly classify them as individual contractors.”
What happens next could have a significant impact on the effectiveness of the Gig Economy business model, especially in states that have not yet passed their own legislation on the issue and will turn to the federal leadership for guidance.
“Repealing this rule is the first step,” said Shannon Lis-Riordan, a top Labor rights and gig economy attorney. “The Biden administration has made it clear that it supports stronger tests, not weaker tests, to categorize workers.”
The Department of Labor has indicated that no new rules will be enacted in the immediate future, with the Biden administration pressing Congress to enact legislation that would strengthen labor protection measures, including classification and unionization.
Speaking to investors on Wednesday, Uber officials sought to allay concerns.
“I don’t think anyone should be surprised that the Biden / Harris administration’s approach to these issues is similar to the Obama / Biden administration approach,” said Tony West, Uber’s chief legal officer.
The West, who is the brother-in-law of Vice President Kamala Harris, stressed the Labor Department’s apparent interest in meeting with gig economy players to discuss measures in the coming months, saying there is no single con value within the Democratic Party.
“We think that all of this creates a real opportunity for a dialogue that could ultimately lead to a solution that gives Gig workers the protection they deserve while preserving their innovation that preserves their desired flexibility,” Westerners said.
Uber was aware of the potential cost of creating its 3.5 million globally active drivers and no staff of couriers, but recent changes give a glimpse into how the future financial burden could be handled.
Following a landmark ruling by the UK Supreme Court in February, which ruled that drivers should be subject to the country’s “worker” title, Uber acknowledged the অর্ 600 million in costs expected to cover the cost of meeting wages. “What we’re looking for is to get the level playing field and other ride companies to do the right thing,” said Dara Khosroshahi, Uber’s chief executive.
Faced with stricter controls in Germany, Uber is experimenting with a fleet model, where drivers hire fleet management companies, such as the minicab companies contracted with Uber.
In California, Uber Giga was among the players in the economy that a new law was enacted in 2020, Proposition 22, which would enable companies to avoid hiring workers, instead giving them limited benefits such as minimum wage and certain provisions for healthcare.
The cost of bearing the cost of Prop 22 has been cut to most customers, said Nelson Choi, Uber’s chief financial officer, adding that demand has no effect.
Lift co-founder and president John Zimmer suggested that the Prop 22 playbook would be emulated. “I am hopeful that we will have a few more success stories to bring this model to more states this calendar year,” he told investors.
A recent survey conducted by Tulchin Research in collaboration with union groups suggested that 75 percent of app-based drivers did not use the healthcare benefits introduced by Prop22, even if they did not reach the hour-driven doorstep, not knowing enough about the plan or what it was. Didn’t look for it.
Arguably, Uber has now removed the additional features offered by California drivers, such as viewing a destination before taking a trip, which would have rationalized its employees to increase control over their work.
“The history of what happened with Prop 22 in California teaches a lot for workers’ lawyers who are now resisting such initiatives in other states,” said Lis-Riordan. “The gig economy somehow sold Prop 22 to California voters in the interests of workers, which is just a lie.”