Uber, Lyft Sued by California in Major Gig-Economy Crackdown (2)

Uber Technologies Inc. and Lyft Inc. were sued by California for allegedly violating a new state law designed to give gig-economy workers the benefits of employees.

While expected, the lawsuit filed Tuesday in state court marks a serious threat to the business model of an array of companies that save on labor costs by classifying workers as independent contractors. If the companies ultimately lose the suit, they could be forced to pay for overtime, health care and other benefits.

The complaint “asserts that Uber and Lyft gain an unfair and unlawful competitive advantage by inappropriately classifying massive numbers of California ...