Shares for gig economy worker-reliant companies, including Uber, Doordash, and Lyft, fell by about 10% during Wall Street trading on Tuesday amid a proposal on how independent contractors are treated in the U.S.
The proposal could signal changes in regulation that would work to deter companies from considering their workers as independent contractors.
The move could considerably raise costs for companies like Uber and Lyft, which shuttle passengers around in ride-share arrangements, and Doordash, which delivers goods and retail items to customers.
These companies rely heavily on gig economy workers because of perceived benefits and promises of setting their hours and making money at any time or day of the week.
Biden's U.S. Department of Labor released the proposal Tuesday that could permit gig workers to be reclassified as employees and not contractors, CNBC reported.
A court previously reinstated a rule set during the Trump White House that would make it easier to classify gig workers as contractors. Biden's Labor Department tried to block that rule.
In California, where many companies that rely on the gig economy are based, a 2020 law went into effect that required many of the state's companies to reclassify contractors as employees. Later that year, voters in the state approved a rule to exempt ride-hailing and delivery companies that are app-based from having to abide by the law.
In a Tuesday statement from Lyft, the company wrote that there is "no immediate or direct impact on the Lyft business at this time.”
Lyft said, "Any new rule that addresses independent contractor status should be informed by those it impacts most: the workers. App-based work, in particular, is fundamentally different from traditional 9-to-5 work," Lyft claims.
The company said, "Nowhere else can you find the same minute-by-minute flexibility to decide when, where, and for how long you want to earn."
Lyft said that 95% of its drivers have other jobs outside of driving for Lyft or are students "in addition to driving with Lyft."