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Lyft President John Zimmer told CNBC’s Jim Cramer on Monday that he was confident the rideshare company would overcome the latest legal hurdle that threatens its operating model.
The most recent hurdle came on Friday, when a California judge ruled against a voting measure approved by voters in the state last year, known as Proposition 22. It exempted drivers from companies like Uber and Lyft, as well as food delivery companies, from California labor law. who tried to make sure they were classified as employees, not independent contractors.
Judge Frank Roesch, Alameda County Superior Court Judge, wrote in his ruling that Proposition 22 violates the state of California constitution because “it limits the power of a future legislature to define drivers. based on applications like workers subject to workers compensation law “. As a result, argued Roesch, the whole ballot measure cannot be applied.
Protect App-Based Drivers and Services Coalition, which supports preposition 22, told Reuters it is appealing Roesch’s decision.
“As for the higher courts, the California Court of Appeals, we are extremely confident that the proposal will be upheld,” Zimmer, who also co-founded Lyft, said in an interview Monday on “Mad Money.”
Lyft, Uber, and other so-called odd-job economy companies like DoorDash have spent millions of dollars on the initial ballot measure, which passed in November with nearly 59 percent of California voters lapping it up. supporting.
The companies had warned that classifying drivers as employees would lead to higher operating costs – such as the need to contribute to unemployment insurance – which, in turn, would be passed on to consumers through price increases for services.
Lyft and Uber have struggled to achieve consistent profitability throughout their history, but both are trying to achieve it. Investors are looking for progress on these goals, which would be complicated if they were to adjust their business models to driver classification.
Following Roesch’s decision on Friday, however, Zimmer said there would be “no change” to Lyft’s operations in California.
Asked by Cramer if Lyft expected the appeal to progress in about six months, Zimmer replied, “It’s difficult to fully predict the legal processes, but we are optimistic that within that time we will get a more final resolution. . ”
Lyft shares rose nearly 3% on Monday, ending at $ 47.24 each. Uber also closed higher for the session, rising 2.6% to $ 41 per share.
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