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uberxIn a ruling that could have wide-ranging impact to the business models and bottom lines of new on-demand service companies, a U.S. District judge said Tuesday that a group of Uber drivers may continue their lawsuit against the ride-hailing company as a class action.

At the center of the lawsuit is how Uber drivers are classified: as independent contractors, like they are now, or employees that receive benefits and rights typically given to workers at private companies.

The suit, parts of which will now apply to all drivers in the state of California given today’s ruling, specifically contends that Uber violates California’s labor laws in regard to reimbursement for driving expenses and tips.

What a jury ultimately decides next year at trial could set a blueprint for how Uber, Lyft, and other companies that use independent contractors are legally expected to treat their workers across the country.

Bloomberg reported that the ruling could cut into Uber’s $50 billion valuation, quoting an employment lawyer who called it a “very big deal.”

On a related note, Seattle councilmember Mike O’Brien is set to introduce legislation next week that offers Uber, Lyft, taxi and other “for-hire” drivers the right to unionize.

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