Non-full time employees often do not receive significant benefits. However, being classified as a contractor means paying the employer side of income taxes (yes, "self-employed" contractors essentially pay double the tax rate of employees). On your taxes your gross income compared to take home after taxes is a much larger margin for contractors as a result, disqualifying people for assistance programs and health insurance subsidies at a much lower take home pay than traditional employees.

What Uber and Lyft have essentially done here is to make their employees pay a substantial portion of what would otherwise be corporate taxes, and pocket that difference as profits while their drivers actually meet the legal criteria to require classification as employees. They shouldn't just be getting ordered to begin complying with the law, this should have resulted in a class action law suite for damages and a felony tax evasion case brought against them.