The state assembly in California passed legislation on Wednesday that would require employers to recognize hundreds of thousands of gig workers as employees and could have far-reaching implications for contractors across the US.

In a win for labor advocates, Bill 5 passed 53-11 in the assembly and will now move to the senate. If signed by the governor, the legislation would put into action a decision made by the California state supreme court in May 2018 known as Dynamex, which uses a three-part test to determine if contractors qualify as employees entitled to protections and benefits.

If passed, the bill would represent a “turning of the tide” for contractors, said Veena Dubal, an associate professor of employment law at UC Hastings.

“The labor community has been really focusing for the last six years on the Uber-ization of the economy and the growth of unprotected labor,” she said. “This would give low-wage workers the protections they need and deserve.”

To be exempt from labor requirements, an employer would be required to prove the following: that its workers have complete control over how services are provided, that the services provided are not related to the employer’s main business, and that the worker is engaged in an “independently established” role.

The bill’s passage on Wednesday comes as legal protection of contractors has faced an uncertain future following federal decisions in recent months. Following a nationwide strike organized by Uber drivers in May, the National Labor Relations Board released an opinion stating drivers were not employees.

The memo, the first of its kind on the gig economy, ruled that drivers were in “complete control” of their cars, work schedules and log-in locations, making them independent contractors with “entrepreneurial opportunity” outside of the app, including the option to drive for rival companies such as Lyft. Uber’s “hands-off” approach, the opinion said, included surge pricing, which increases drivers’ earnings when rides are in higher demand. That was “consistent with independent-contractor status”, the memo said.

Other states often look to California, the birthplace of major gig economy companies like Lyft and Uber, regarding how to legislate the changing labor landscape, Dubal said, making the passage of Wednesday’s bill particularly significant.

Assemblywoman Lorena Gonzalez said on the assembly floor regarding her bill that companies misclassified workers to cut costs and avoid complying with worker protection laws including minimum wage, bargaining rights, and overtime, losing the state “upwards of $8bn a year”.

“Big businesses shouldn’t be able to pass their costs on to taxpayers while depriving workers of the labor law protections they are rightfully entitled to,” Gonzalez in a tweet on Wednesday.