Uber, Lyft Must Convert Drivers Into Employees, Judge Rules (3)

Uber Technologies Inc. and Lyft Inc. were ordered to convert their California drivers from independent contractors to employees with benefits, an early loss in a court battle the gig industry can’t afford to lose.

A judge’s ruling Monday won’t be the last word, as Uber and Lyft vowed to immediately appeal the preliminary injunction. If the companies are forced to reclassify their California drivers as employees, they would be on the hook for overtime, health care and other costly benefits.

The case brought by California officials to enforce a state labor law that took effect this year is the most ...