Gig workers still pose roadblock for Uber and Lyft

NEW YORK, March 14 (Reuters Breakingviews) - Uber Technologies (UBER.N) and Lyft (LYFT.O) dodged a pothole, but bigger roadblocks may be on the horizon. A California court on Monday found in favor of letting the ride-sharing companies classify their drivers as independent contractors. That doesn’t eliminate risks from recent unionization drives and plentiful jobs elsewhere, though.

Keeping workers off permanent payroll will help tamp down potential costs. Jefferies estimates Uber, Lyft and food delivery service DoorDash (DASH.N) will avoid a $20 million to $170 million knock on next year’s earnings thanks to the ruling. Shares in all three companies were up around 6% in late-morning trading on Tuesday.

The enthusiastic reaction might be missing other incipient problems. Employees of companies from Starbucks (SBUX.O) to Apple (AAPL.O) are looking to organize as they push for better benefits. A group of Uber and Lyft drivers in New York City staged a strike in February over demands for higher wages. And with a tight job market, competition for workers from employers in other sectors – like retailers, which are hiking minimum wages – is stiff. The Biden administration could still step in, too, having proposed new guidelines for classifying independent workers as employees. There are yellow lights flashing ahead. (By Jennifer Saba)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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