Hours before Uber was set to report first-quarter earnings after the closing bell on Wednesday, the Labor Department announced it is withdrawing a Trump-era rule that would have made it easier for companies to classify workers as independent contractors instead of employees, effective on Thursday.

The rule, dubbed the “Independent Contractor Rule,” made it more difficult for workers to classify themselves as employees and receive provisions such as overtime and a minimum wage. Gig-worker classifications have a significant impact on the likes of Uber (and its peer Lyft, which reported strong earnings on Tuesday) and other companies that rely on the flexibility of the gig economy.

Few analysts expect any federal legislation to pass that would force Uber to dramatically change its business model anytime soon (if at all). Still, the announcement casts a “dark cloud” over the company’s earnings on Wednesday, and could even throw “a major wrench in the bull case” for the stock, Dan Ives, an analyst at Wedbush Securities, tells Fortune.

As of early afternoon trading, Uber’s stock was down roughly 4% for the day. The announcement, in addition to comments made last week by Labor Secretary Marty Walsh in favor of classifying gig workers as employees, comes at a time when, as Ives argues, “these ride-sharing stalwarts have done phenomenal in terms of a rebound, cut costs, and done better than even the bulls’ best case relative to the pandemic, with a springboard impact going into the second half” of 2021. In that sense, the timing “definitely crashes the party a bit in terms of overshadowing earnings,” he suggests.

But more important, Ives believes that “even though this adds to the agita that investors went through with Prop 22, the reality is that in the next 12 to 18 months, nothing really changes for the gig economy,” he suggests. (California’s Proposition 22, which was approved at the polls last year, exempted ride-share companies from a state law requiring them to classify their gig workers as employees, provided they offer some new benefits.) Legislation would likely be necessary in order for changes in gig workers’ employment categorization to become national—something Ives suspects is unlikely. For now, Ives says he’s banking on a “middle ground” scenario, even though the move adds “uncertainty.”

What to watch for in Uber’s earnings

Analysts do expect Uber to post good numbers on Wednesday for its first quarter, as the company rebounds from the pandemic. The Street is expecting revenues to come in at $3.3 billion and GAAP earnings to notch in at a loss of 60¢ per share, per Bloomberg data. Ives is anticipating that, “across every metric, they’re going to come in pretty strong,” buoyed by a big rebound in bookings as the vaccine rollout gained steam. The quarter, plus guidance from the company, should put Uber “on a strong trajectory,” Ives believes, especially from a “profitability perspective.” (Wedbush anticipates Uber becoming profitable in 2022.)

Also on analysts’ radar: the performance of Uber’s delivery business segment (think Uber Eats), which is expected to come in strong for Q1 but slow from here as people feel more comfortable eating out. Some Uber-watchers are also eyeing a driver shortage, as “Uber and its peers appear to be struggling to keep up with increasing ride demand,” Bank of America analyst Justin Post wrote in a Tuesday note. Meanwhile Ives suggests investors will be listening for more clarity on how a British government ruling to classify drivers as workers (entitled to minimum wage) in the U.K. may impact its profitability path.

But BofA’s Post believes “Uber stands in a better place today than a few months ago given data points showing a strong local mobility recovery is already materializing,” he wrote.

Ultimately, “even though we believe [employment classification] is a state issue and no business model changes for now,” Ives argues, “it reignites [the] employee versus contractor debate that many investors thought was in the rearview mirror.”

It’s an issue, adds Ives, that’s “worth watching” for investors.

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