Shares of ride-hailing companies Uber Technologies Inc. and Lyft Inc, tumbled over 12% on Tuesday after the administration of United States President Joe Biden unveiled a proposal that could force the companies to hire drivers as full-time workers, rather than as independent contractors.
The Labor Department proposed revising the guidance on how to determine who is an employee and who is an independent contractor. "While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors," US Labor Secretary Marty Walsh stated. "Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages," he added.
Earlier, Uber was forced to reclassify its drivers as employees in several countries such as the United Kingdom and the Netherlands.
Uber shares plunged 15.03% to $23.37 at 10:06 am ET and Lyft shares dropped 13.97% to $11.015 at 10:22 am ET.
