Lyft Stock (NASDAQ:LYFT)
At 11:32 a.m. Eastern Time on Tuesday morning, Lyft Stock is down 10.3%. This comes after the United States Department of Labor announced proposed new guidelines that would require firms in the gig economy to designate their drivers as workers.
Since well over a year ago, Lyft (NASDAQ:LYFT), Uber Technologies, and DoorDash have been operating in the shadow of the possibility of legal action being taken by the federal government. After California voters rejected the costly restriction on participants in the gig economy in 2020, the administration of former Vice President Joe Biden hinted that it might examine applying the rule nationally.
However, in 2021, a court in California annulled the state ballot proposition that had been passed.
Then What?
According to the rules that are being proposed by the Labor Department, companies like Lyft (NASDAQ:LYFT) and others would be required to define independent contractors as workers who are entitled to all of the benefits that are offered to normal corporate employees.
Even while ridesharing businesses are the most obvious target of such regulatory changes, the effect would be far more widespread and significant across the economy. It would be necessary for hundreds of different professions, crafts, and businesses, such as those dealing with delivering food and groceries, publishing and newsrooms, transportation firms, and many more, to redefine their connection.
It is estimated that as much as 36% of the workforce in the United States is comprised of people who are considered independent contractors, comparable to 58 million individuals.
What’s Next?
When the state of California was considering mandating that companies in the gig economy reclassify their drivers, a libertarian think tank called the Competitive Enterprise Institute estimated that fares could increase by as much as 50%. In contrast, the costs that Lyft (NASDAQ:LYFT) and other companies would face would skyrocket by approximately 67 percent. At the time, California contributed 14% of Lyft’s total income, and Lyft Stock saw an increase in expenditures of almost $260 million.
Uber and DoorDash saw their share prices fall, with Uber falling by 7.7% and DoorDash falling by 6.1%.
Featured Image- Megapixl @ Mohammedsoliman4
Author Shariq Khan 
