The state Senate voted in favor of the bill – dubbed Assembly Bill 5 (AB5) – that would ensure gig economy workers in companies like Uber, Lyft, and DoorDash are entitled to minimum wage, workers‘ compensation, and other benefits.

The contentious bill was passed in a 29 to 11 vote as the legislative session was about to end for the year. AB5 had passed the State Assembly on May 29 with a 53-11 vote. It is expected to be signed by California Governor Gavin Newsom, and will go into effect starting January 1, 2020.

The business models of these companies are already under severe strain. Although the extent to which AB5 could impact these platforms is unknown, it’s expected to drive their labor costs up by 30 percent, according to a report by San Francisco Chronicle.

Last month, Uber reported a record second quarter loss of $5.2 billion, its largest ever quarterly loss. The company laid off 435 employees across its engineering and product teams yesterday, on top of the 400 marketing team employees who were handed pink slips in late July in an attempt to cut costs.

Litigation is now likely to follow passage of the new law. Uber said Wednesday that it was confident that its drivers will retain their independent status when the measure goes into effect on Jan. 1. “Several previous rulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces,” said Tony West, Uber’s chief legal officer. He added that the company was “no stranger to legal battles.”

California has at least one million workers who work as contractors and are likely to be affected by the measure, including nail salon workers, janitors and construction workers. Unlike contractors, employees are covered by minimum-wage and overtime laws. Businesses must also contribute to unemployment insurance and workers’ compensation funds on their employees’ behalf.

In California, religious groups said they feared that small churches and synagogues would not be able to afford making pastors and rabbis employees. Winemakers and franchise owners said they were worried they could be ensnared by the law, too.

Historically, if workers thought they had been misclassified as a contractor, it was up to them to fight the classification in court. But the bill allows cities to sue companies that don’t comply.

San Francisco’s city attorney, Dennis Herrera, has indicated that he may take action. “Ensuring workers are treated fairly is one of the trademarks of this office,” he said in a statement.

And California may be only the beginning, as lawmakers elsewhere, including New York, move to embrace such policies. Legislators in Oregon and Washington State said they believed that California’s approval gave new momentum to similar bills that they had drafted.