A judge struck down a California ballot measure on Friday.
The measure exempted Uber and other app-based ride-hailing and delivery services from a state law that needed drivers to be classified as employees eligible for benefits and job protections.
Alameda County Superior Court Judge Frank Roesch ruled that Proposition 22 was not constitutional.
Uber said it was going to appeal, setting up a fight that could likely end up in the California Supreme Court.
“This ruling ignores the will of the overwhelming majority of California voters and defies both logic and the law,” Uber spokesman Noah Edwardsen said. “You don’t have to take our word for it: California’s attorney general strongly defended Proposition 22’s constitutionality in this very case.”
He added the measure will remain in force pending the appeal.
The judge’s ruling favored three drivers and the Service Employees International Union in a lawsuit that argued the measure improperly removed the state Legislature’s ability to provide workers the right to access the state workers’ compensation program.
Proposition 22 protected app-based ride-hailing and delivery companies from a labor law that needed such services to treat drivers as employees and not independent contractors, who don’t have to get benefits such as paid sick leave or unemployment insurance.
Uber and Lyft threatened to leave the state if voters declined the measure.
Labor spent about $20 million to challenge the proposition.