Uber, Lyft and DoorDash tumble as Biden administration proposes gig-worker rule that eases path to full employee

• DoorDash, Lyft and Uber all fell Tuesday after the Biden administration proposed a change to employee classifications.
• The proposal could make it easier to reclassify workers as employees instead of as contractors.

Gig-work stocks DoorDash, Lyft and Uber all fell Tuesday after the Labor Department unveiled a proposal on how companies classify workers.

The proposed rule would base the determination of whether to classify a worker as a contractor or employee on a broad assessment, such as if the gig work is an "integral" part of a company's business.

That could ease the way to reclassifying drivers from independent contractors to full-scale employees, entailing additional costs and requirements.

The companies have long argued that the contractor classification is more attractive for their drivers and often point ot the benefit of flexible schedules. Labor advocates, however, say the practice is merely an attempt to keep company costs low and prevent workers from unionizing or qualifying for employer healthcare.

Shares of Uber tumbled 7.6% to $25.43 in midday trading, while DoorDash fell 3% to $46.21, and Lyft plummeted 7.4% to $11.86.

The Biden administration took steps last year toward changing the classification by rescinding a Trump-era rule that made it easier for gig employers to classify workers as contractors. An ensuing court battle eventually upheld the Trump-era provision.

Instead of waiting to see the full ramifications of the Trump Labor Department's rule, the Biden administration said in its notice to the Federal Register that it's moving to walk back the rule now.

The change has yet to fully go through a regulatory process, which includes public comment and input before officially being adopted.