Shares in ride-hailing and food delivery companies fell across the board today after Labor Secretary Marty Walsh (pictured) said that gig-economy workers should be classified as employees.

While seemingly not yet the official policy of the Biden administration, that Walsh (pictured) said so is described by Reuters as suggesting a shift in policy that could raise costs for companies that depend on contractors.

The idea that gig workers working for companies such as Uber Technologies Inc., Lyft Inc., Doordash Inc. Grubhub Inc. should be classified as employees has precedent. California passed Assembly Bill 5 in September 2019 mandating that people working for such companies should be classed as employees and hence be subject to the minimum wage law and be entitled to other benefits offered to employees.

That law was subsequently voted out through Proposition 22, a ballot measure exempting companies such as Uber and Lyft from having to classify drivers as employees in November. Walsh apparently doesn’t agree with that, however.

“We are looking at it but gig workers should be classified as employees… in cases they are treated respectfully and in cases they are not and I think it has to be consistent across the board,” Walsh told Reuters in an interview. “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.”

Actually, Uber and Lyft are famously unprofitable. Uber, before it went public, was nearly synonymous as a Silicon Valley-funded startup that bled the most money. As of its last earnings report, Uber booked a quarterly loss of $968 million and Lyft as of its last earnings report reported a quarterly loss of $458 million.

Uber shares dropped as much as 8% while Lyft shares fell as much as 12%. Doordash shares fell nearly 9%, while Grubhub was down 3.3%.

Photo: Mark Sardella/Flickr