Shares of companies like Uber (UBER) - Get Report, Lyft (LYFT) - Get Report and DoorDash (DASH) - Get Report dropped Thursday after a member of President Joe Biden's administration said gig workers should be classified as employees.
Gig workers should receive the benefits that employees do, including health insurance and other perks, according to Labor Secretary Marty Walsh.
Walsh also told Reuters that "in some cases they are not and I think it has to be consistent across the board."
Shares of DoorDash dropped 8.4% to $148.83 while Uber declined 5.1% to $55.45 and Lyft fell 11% to $56.69. All three companies are based in San Francisco.
“These companies are making profits and revenue and I’m not (going to) begrudge anyone for that because that’s what we are about in America. ... [But] we also want to make sure that success trickles down to the worker,” Walsh said, according to Reuters.
The U.S. Bureau of Labor Statistics tallied 55 million gig workers in the U.S. in 2017, representing about a third of the country's workforce. That proportion was projected to rise to 43% in 2020.
Late last year, California passed Proposition 22, which enabled companies like the ride-share and food-delivery providers to classify their employees as independents and not full-time staff entitled to benefits.
Last month, Uber shares dropped after it said that it would be treating its drivers in the U.K. as full-time employees entitled to a minimum wage, pension benefits and other rights.
The move came after Uber lost a court case in February challenging the requirements.