Uber, Lyft must make drivers employees: Appeals Court

Uber and Lyft encountered a major setback in the case to reclassify their workers according to an appeals court ruling on Thursday. The Final Round panel breaks down the details .

Video Transcript

MYLES UDLAND: All right, let's turn our attention now very quickly to what's going on in the ride sharing space and sort of what we've seen from shares of both Lyft and Uber. And specifically here, I think Lyft, Seana, is the more compelling story, just for looking at how the stock has remained under pressure and can't really get any breaks. Uber has been floated perhaps a little bit by what's happening with the Eats business. Dara Khosrowshahi remains quite bullish on their ability to be adjusted EBITDA profitable.

But ultimately, these companies and their political concerns, really, are no different now than they were in the pre-pandemic period, concerns over having to classify their drivers as workers. And we look at the charts here year to date, Lyft shares down some 40%.

SEANA SMITH: Yeah, and I think that this is something that we've talked about in the past. Obviously, the huge impact that it could have on their business, we're seeing that reflected in the stock prices. And I think that this is going to remain a huge concern here going forward. This has a massive impact not only on Uber and Lyft, but really, just far beyond these ridesharing companies.

Because when we talk about the rise of the gig economy, so many companies here classifying their workers not as full-time employees, yet just drivers. Or they are, I guess, gig workers, part-time workers. They don't want to pay for health insurance. We're seeing that time and time again here with not only Uber and Lyft. So I think the big story here is just how wide reaching this story could potentially become and how many companies could potentially be impacted by this ruling here going forward.

MYLES UDLAND: Yeah, and I think it's interesting that it's been an overhang for these business models for the entire time that they've existed when they were private, when they were seed round, when they were series B, C, D, E, F and G in their funding history. And it was all sort of kind of explained away by their investors. And I think public market investors are sort of forced to do the same thing. But it is unclear sort of if this will ultimately result in these companies' favor. And if it doesn't now, will this continue to be sort of an overhang for them as they continue to live their corporate lives--