Uber Shares Jump 9% as Contractor-Classification Rollback Averts $4 B Cost
Uber shares rose 9% and Lyft gained 12% after the Department of Labor rescinded a regulation that would have required classifying drivers as employees by 2027, averting an estimated $4 billion in additional labor expenses. Investors drove both stocks to one-year highs on expectations of stronger profit margins under the contractor model.
1. Policy Rollback Details
The new administration withdrew a Biden-era Department of Labor rule set to reclassify ride-hail and delivery drivers as employees beginning in January 2027. The original regulation would have imposed minimum wage, overtime, unemployment insurance and benefits requirements on gig companies.
2. Stock Market Reaction
Following the announcement, Uber shares climbed 9% to reach a one-year high, while Lyft jumped 12% in early trading. The two stocks outperformed the broader market as investors reacted to reduced regulatory risk and cost pressures.
3. Financial Implications
Analysts estimate the rescinded rule would have added up to $4 billion annually in wages, benefits and payroll taxes for Uber and Lyft combined. Maintaining the contractor model preserves current cost structures and could boost EBITDA margins by several percentage points over the next two years.