Uber and Lyft Hit a Stretch of Pre-Election Bumps

Less than two weeks ahead of the election, Uber and Lyft are hitting new roadblocks after pouring money into a ballot measure intended to protect their business model.

On Thursday, a California appeals court put that strategy into question when it upheld an earlier ruling that the ride-hailing companies must classify their workers as employees instead of independent contractors. The court ruling won't take effect for 30 days, adding even more pressure on the ride-hailing companies' Proposition 22.

Later that day, a group of California Uber drivers filed a lawsuit against Uber alleging the company is engaged in illegal political coercion by constantly sending them pro-Prop 22 in-app alerts. The suit asks for $260 million in penalties.

Uber, Lyft, Postmates and other app-based delivery giants have pumped over $180 million into Prop 22 to keep their drivers from needing to be reclassified as employees. Experts say if it fails, labor costs for the companies could jump 20 to 30%.

The barrage of cash has been spent on in-app messages, commercials and text messages about how drivers would lose flexibility and health care if the measure doesn't pass. The companies also say prices and delivery wait times for customers would skyrocket.

If it passes, gig workers wouldn't be entitled to protections including paid sick leave, overtime pay, and other benefits laid out in California's recently passed AB5 law.