The Clap
Gig workers could soon be legally classified as employees rather than contractors, threatening higher costs for gig based companies like Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT).
Background
In 2020, a law was passed that required companies to classify contractors as employees, but that law exempted app-based ride hailing and delivery services.
The Deets
Now, the proposed change may turn the table on the exempted companies, whose business model relies heavily on independent contractors.
The companies debated this proposal saying that the flexibility in work schedules is very attractive to workers.
Why this Matters
Following the news, Uber, Lyft, and DoorDash’s stocks saw declines of around 12%, 10%, and 6% respectively.
