Uber must begin classifying their drivers as employees, a California judge has ruled, condemning the company's "prolonged and brazen refusal" to comply with the US state's law.
The app-based taxi company and its US competitor Lyft are being sued by the California Attorney General for failing to comply with a new law setting strict boundaries on when companies can classify workers as independent contractors, rather than employees who are entitled to benefits such as sick leave and health insurance. Uber has more than 100,000 drivers in California.
In an order granting an injunction requested by the Attorney General to enforce the law, San Francisco judge Ethan Schulman said the state had demonstrated an "overwhelming likelihood" of winning the case.
He rejected Uber's main defence, that drivers did not form a central part of its business, arguing that it "flies in the face of economic reality and common sense".
Edan Alva, a Lyft driver and member of Gig Workers Rising, a California-based driver advocacy group, said: "Today, the court sided with workers and not corporations."
Enforcement of the injunction will be delayed by 10 days to give the companies a chance to appeal, something Uber said it planned to do.
Uber and Lyft have long argued that their business model should fall outside of traditional labour laws, offering drivers greater flexibility, but opponents argue that they underpay drivers, forcing them to work long hours to make a living.
Uber has also been successfully taken to court in the UK over its practices. The Supreme Court is set to rule on its final appeal later this year.
Two former drivers first won an employment tribunal case against it in 2016.
Responding to the ruling, a spokesman for Uber said: "The court’s ruling is stayed for a minimum of 10 days, and we plan to file an immediate emergency appeal on behalf of California drivers.
"The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law. "
Writing in the New York Times on Monday, Uber chief executive Dara Khosrowshahi said gig economy companies should provide benefits funds for their workers.
"If we eliminate this work, how do we expect the millions of Americans who have been doing gig work to stay afloat when few companies are hiring?" he said.