A California judge ruled Monday that Uber Technologies Inc. and Lyft Inc. must classify their drivers as employees due to a new state law, a decision that threatens the business models of the ride-hailing giants and other gig-economy companies.
California Attorney General Xavier Becerra and the city attorneys of San Francisco, Los Angeles and San Diego sued the companies earlier this year, asking a judge for a mandatory injunction ordering the companies to comply immediately with a new state law over worker classification, which became effective Jan. 1. Uber
UBER,
is challenging the constitutionality of the law, known as
