California businesses will soon face new limits in their use of independent contractors under a closely watched proposal signed into law by Gov. Gavin Newsom on Wednesday, a decision praised by organized labor but unlikely to quell a growing debate over the rules and nature of work in the 21st century economy.

Newsom, who signed Assembly Bill 5 in a private ceremony in his state Capitol office, had already committed to embracing the new law. Legislators gave final approval to the sweeping new employment rules before adjourning for the year last week.