I strongly disagree. Companies have abused contractor status for a long time. This is simply more of the same - another company wishing to have their cake and eat it too. It ultimately lets them pay at least some of their employees under minimum wage. Which puts more money in their pocketbook, and takes more money out of ours (the taxpayer's) through the form of extra government assistance.
People can choose where to work. If people thought that Uber didn't offer them a good deal for employment, they can just go work somewhere else.
All this does is force Uber to offer benefits which would only make them take a higher cut in the long run. Drivers will suffer in terms of their income. This entire thing is pretty dumb.
Adding to this, "the free market will decide" can sometimes be a cop-out, but in this case it applies perfectly.
There are reasonably low barriers to entry in this market, for the most part. If Uber treating its drivers as contractors rather than employees impacts Uber drivers in a negative enough way that they would prefer to work elsewhere, there is likely ample space for a competitor which offers a better deal for its drivers.
Drivers have little-to-no incentive to stay with Uber if they can get a better deal elsewhere (based on what I've seen, many already also work for Lyft), and users have little-to-no reason to stick with one on-demand ride app if there's another app that has more availability/drivers.
If cost-of-ride is the biggest competitive differentiator, the price of the ride will stay the same and drivers will be able to choose whether they want to work for a company which treats them as an employee but takes a bigger cut, or a company which takes a smaller cut but treats them as a contractor.
