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Uber Technologies Inc. and Lyft Inc. lost an early round of a fight with drivers in lawsuits that could upend the companies’ nationwide business models.

The on-demand car services will need to make the case to juries why they shouldn’t offer their drivers minimum wage, reimbursement for expenses and other benefits, according to rulings by two judges in separate cases in San Francisco federal court. Both judges voiced skepticism in January when the companies made their case for their treatment of drivers as contractors rather than employees.

Uber and Lyft use a model throughout the U.S. that provides drivers with mobile-phone applications to pick up riders.

“Because the numerous factors for deciding whether a worker is an employee or an independent contractor point in decidedly different directions, a reasonable jury could go either way,” U.S. District Judge Vince Chhabria wrote in Wednesday’s ruling in the Lyft case. “Accordingly, there must be a trial.”

Lawsuits against Uber, Lyft and other car-booking companies have mounted as they seek to crack open the U.S. taxi and limousine market, estimated by IbisWorld Research to be an $11 billion industry.

Uber, founded in 2009, is the most highly valued U.S. technology startup. The company raised $1.2 billion in December at a valuation of $40 billion.

San Francisco

The cases against Uber and Lyft, which are both based in San Francisco, were brought on behalf of drivers nationwide, although judges have narrowed them to include only California drivers. The drivers allege violations of California labor and gratuities laws.

Chelsea Wilson, a spokeswoman for Lyft, declined to comment on the ruling. An Uber representative didn’t immediately respond to a request for comment.

Shannon Liss-Riordan, an attorney representing drivers in both cases, said she’s pleased the judges rejected the companies’ arguments that the cases should be thrown out without a trial.

“We’re looking forward to trial in both cases,” she said.

Liss-Riordan said the drivers will appeal if they don’t win permission from the trial judges to proceed as a nationwide group.

The cases are Cotter v. Lyft Inc., 13-cv-04065, and O’Connor v. Uber Technologies Inc., 13-cv-03826, U.S. District Court, Northern District of California (San Francisco).

–With assistance from Serena Saitto in New York.

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Topics California USA Personal Auto Contractors