(Vice) On Tuesday, the Biden administration released a proposal that could force so-called gig economy companies like Uber, Lyft, and DoorDash to classify their workers as employees. With the announcement, Uber’s stock was down as much as 17 percent, Lyft’s fell by 16 percent, and DoorDash’s had slipped 12 percent.
For well over a decade, the core strategy deployed by gig economy firms has been to obscure fundamentally unprofitable unit economics by upcharging on services and minimizing labor costs. The chief method to minimize labor costs has long been to misclassify workers as independent contractors rather than employees, denying them a minimum wage, overtime, health insurance, and other costly benefits that get in the way of spinning dismal financial results as favorable for investors.
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