Uber drops 4% after the UK Supreme Court rules that its drivers are employees, not contractors (UBER)

Uber London - Black cab taxi protest

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Uber fell as much as 4% on Friday after the UK Supreme Court ruled that its drivers are employees rather than contractors.
The ruling entitles Uber drivers to basic worker rights such as holiday pay and a minimum wage.
Uber has been fighting this legal battle in the UK since 2016, when two ex-Uber drivers filed a lawsuit against the company.
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Uber fell as much as 4% in premarket trades on Friday after the UK Supreme Court ruled that drivers of the ride hailing app are employees, not independent contractors.

The ruling was a blow to Uber, which has been fighting the lawsuit since 2016, when two ex-Uber drivers filed the lawsuit against the company.

The decision from the UK’s highest court entitles Uber drivers to basic worker right like holiday pay and a minimum wage. The UK represents Uber’s largest European market, with more than 40,000 drivers. 

The dispute will now go to a tribunal, which will determine how much the 25 drivers who led the case against Uber will be awarded. 

The ruling could have wide ramifications for workers and companies within the gig economy across Europe. Uber recently won a similar battle in California last year with the Prop 22 ballot initiative.

Wedbush analyst Dan Ives believes the UK ruling “revives a nightmare for Uber,” according to a Friday note. 

“This case could set a precedent for other workers and companies in the gig economy throughout the UK and Europe which would be a body blow to the overall ecosystem,” Ives said. 

Uber could be more prepared to handle the UK ruling after it implemented different strategies during the Prop 22 fight in California, like allowing drivers to choose which riders to accept and set their own rates, Ives said. 

The negative development isn’t shaking Ives bullish Outperform rating on Uber. Ives reiterated his $76 price target on the stock, representing potential upside of 29%.

Uber has “cleared many challenges and hurdles over the past 18 months and now is in a position of strength heading into a ‘reopening dynamic’ over the next 6 to 9 months,” Ives said, adding that the UK ruling is a “contained risk.”

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Source:: Business Insider


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