Uber and Lyft shares plummet over 10.0% after new after Labor Department proposal

Uber Technologies Inc. (UBER.US) and Lyft Inc (LYFT.US) shares plunged more than 10% on Tuesday after Biden administration unveiled a proposal that could force the ride-hailing companies  to hire drivers as full-time workers, rather than as independent contractors.

The details of the report indicate that the proposed rule is essentially just a test that the Labor Department will conduct in order to determine if workers are classified as contractors or employees. Companies are required to provide certain benefits and protections to employees, but not to contractors.

"While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors," labor secretary Martin Walsh said in a statement.

"Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages."

Uber Technologies Inc. (UBER.US) stock launched today's session with a massive bearish price gap, however sellers failed to keep the price below major support at $24.00, which coincides with 78.6% Fibonacci retracement of the upward wave launched in March 2020. Source: xStation5