Vote counting continues across America on the day after Election Day 2020, but in California at least, one big question has already been answered: By a vote of 58.4% for, 41.6% against (and 72% of ballots counted according to The Associated Press), Proposition 22 has passed.
Uber Technologies (UBER 3.22%) stock is up 12.4% at 10:10 a.m. EST because of it. And Lyft (LYFT 1.21%) stock is up 11.3%.
Why are these two stocks in particular benefiting? Well not to put to fine a point on it, but the reason is because Proposition 22 was passed specifically to benefit these two companies, by exempting "app-based transportation and delivery companies from providing employee benefits to certain drivers," as the title of the proposition states verbatim.
And who are the best-known app-based transportation and delivery companies that will benefit from being able to classify their biggest workforce as independent contractors rather than employees?
That's right. Uber and Lyft.
Now that Prop 22 has passed, Uber and Lyft drivers can expect to receive something more than the usual benefits accorded to independent contractors, but something less than the benefits usually accorded to full-time employees. For example, the companies will have to guarantee a minimum level of hourly earnings, and will provide their workers with vouchers for buying subsidized health insurance. This is going to raise Uber and Lyft's costs a bit, but not as much as they would have been paying under Assembly Bill 5.
Net-net, it's a win for Uber and Lyft.