What a New California Law About Independent Contractors Would Mean to Uber and Lyft

Ride-sharing companies Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) have experienced significant setbacks since their initial IPOs in the spring, but new local laws could have both companies -- and others operating in the gig economy -- scrambling to react.

New York City, the companies' most lucrative market, recently enacted new laws to limit the number of drivers who work for the ride-share companies, establish a minimum wage for the workers, and limit the amount of time they spend on the road.

On the West coast, the California state Senate will soon vote on Assembly Bill 5, a measure that would limit the companies' ability to continue classifying their drivers as independent contractors. If the bill passes, Uber and Lyft will have to designate all drivers as employees, which would require them to comply with minimum wage laws and pay employer-based taxes, among other measures.

Source Fool.com