A California judge on Monday granted the state’s request for a preliminary injunction blocking Uber Technologies Inc (UBER.N) and Lyft Inc (LYFT.O) from classifying their drivers as independent contractors rather than employees.
Judge Ethan Schulman of the San Francisco Superior Court delayed enforcing his order by 10 days to give the companies a chance to appeal.
The decision is a setback for the ride-hailing companies as they defend against a May 5 lawsuit by California Attorney General Xavier Becerra and the cities of Los Angeles, San Diego and San Francisco.
Uber and Lyft were accused of violating a new state law requiring companies to classify workers as employees if they controlled how workers did their jobs, or the work was part of their normal business.
Several hundred thousand “gig” workers, including many at ride-hailing companies and app-based food delivery services, are affected by the law, Assembly Bill 5, which had broad support from organized labor. It took effect on Jan. 1.
Uber and Lyft did not immediately respond to requests for comment.
– Reuters.