If drivers were classified as employees, Uber and Lyft would be responsible for paying them minimum wage, overtime compensation, paid rest periods, and reimbursements for the cost of driving for the companies, including personal vehicle mileage. As independent contractors, drivers receive none of these benefits.
The suit that prompted the ruling was brought by California Attorney General Xavier Becerra (who succeeded Kamala Harris in the role). The companies have another week to appeal the decision before it goes into effect, but if it does, it seems Uber would prefer to pull out of the state rather than offer benefits to drivers. Lyft President John Zimmer said that company would also suspend operations in the state. That would put drivers in a tough situation, either left without jobs or stuck without health benefits during a pandemic.
In November, California voters will vote on Proposition 22, a ballot initiative funded by Uber, Lyft and delivery service DoorDash that would exempt drivers from rules requiring them to be classified as employees.