Why DoorDash Stock Is Sliding

DoorDash Inc DASH shares are trading lower Tuesday on reports the U.S. Department of Labor has released a proposal to make companies reclassify independent contractors as employees.

According to a New York Times report, the Labor Department on Tuesday issued a new proposal that would make it more likely for millions of workers to be classified as employees rather than independent contractors.

The report indicates that the proposed rule is essentially just a test that the Labor Department will run 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."

DoorDash is an online food order demand aggregator. Consumers can use its app to order food on-demand for pickup or delivery from merchants mainly in the U.S.

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DASH Price Action: Doordash has a 52-week high of $152.49 and a 52-week low of $46.56.

The stock was down 9.43% at $43.21 Tuesday morning, according to Benzinga Pro.

Photo: GoToVan from Flickr.