Uber Technologies Inc. and Lyft Inc. surged the most in several months after California voters approved a measure to protect the companies’ business models from efforts to reclassify their drivers in the state as employees.

Uber shares surged as much as 18 per cent, the most since March, while Lyft rose as much as 22 per cent, the most since May, following the passage of Proposition 22. The initiative was crafted and bankrolled by gig-economy companies to exempt their workers from a new law designed to give them employee benefits.

The ballot measure in their home state was the costliest in California history. Uber and Lyft, along with venture-backed food delivery companies DoorDash Inc., Instacart Inc. and Postmates Inc., contributed about US$200 million to fund “Yes on 22.” Labor unions and other opponents raised only about US$20 million.

The reaction from investors Wednesday reflects not just the stakes in California but also expectations of what will happen elsewhere. Officials in New York, Illinois and other states have also considered bolstering labor protections in the gig economy.

“This could be seen as a shot across the bow,” said Sharon Block, executive director of the Labor and Worklife Program at Harvard Law School. “Everybody’s looking at California.”

Under the new law, gig companies have agreed to provide some new protections to California workers, including a guaranteed wage for time spent driving and a health insurance stipend, but does not include paid sick leave, unemployment insurance and other standard protections afforded under California labor laws.

Tom White, an analyst at DA Davidson, said the result “is probably most impactful for Lyft in the near-term,” given that California accounts for about 16 per cent of Lyft’s rides. He estimates the state represents a high-single digit percentage of Uber’s overall business.

Uber is scheduled to release quarterly financial results on Thursday, and Lyft reports Nov. 10.