Uber loses key legal battle on home turf as drivers win right to bring class action suit

Uber drivers have won the right to bring a class-action law suit against the controversial taxi hailing app in a key legal battle that could potentially undermine the company's business model.

Three drivers had taken a case to a Californian court claiming that they should be considered as employees rather than contractors and therefore be entitled to reimbursement for expenses, including fuel.

At the moment drivers cover those costs themselves.

A judge in Uber's home city of San Francisco ruled that drivers could bring legal action as a group - a status that can give them more leverage in settlement negotiations.

The outcome of the case could reshape the sharing economy, in which internet companies like Uber match people who provide a service with others looking to pay for it.

The flexibility of the contractor model is seen by many as central to its and its rivals success.

Uber sought to play down the possible ramifactions of the verdict, saying only a "tiny fraction" of a potential 160,000 California drivers are eligible to be class members under the judge's ruling.

“While we are not surprised by this Court's ruling, we are pleased that it has decided to certify only a tiny fraction of the class that the plaintiffs were seeking," a spokesperson said in a statement, adding that one of the three plaintiffs in the case does not qualify as a result.

"We'll most likely appeal the decision as partners use Uber on their own terms, and there really is no typical driver - the key question at issue.”

A lawyer for drivers, Shannon Liss-Riordan, said Uber's characterisation of the size of the class is "not correct," and that "many thousands" will be part of the lawsuit.

"This decision is a major victory for Uber drivers," she added.

Additional reporting by Reuters