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Shares of Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) are trading sharply lower on Tuesday after the U.S. Department of Labor (DoL) announced a proposed rule change that would make it harder for companies to classify workers as independent contractors.
The new proposal changes the way DoL decides if workers can be classified as employees or independent contractors. The aim is to make it more likely for gig workers to be classified as employees rather than independent contractors.
Uber and Lyft shares trade lower given their business utilizes benefits of employing gig workers. Businesses are required to provide certain benefits to employees, but not to contractors.
“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors,” the labor secretary, Martin J. Walsh, said in a statement.
“Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages.”
Uber and Lyft shares are down 11% and 10%, respectively, today.
