A federal judge on Tuesday dealt a blow to Uber’s efforts to neutralize a major legal challenge to its business model, finding that a lawsuit against the growing ride-sharing company can proceed as a class-action on behalf of most California drivers who have worked for the Bay Area outfit since 2009.

In a 68-page ruling, U.S. District Judge Edward Chen rejected Uber’s argument that the case should not proceed as a class-action – an argument that would have made it far more difficult to successfully press legal claims that Uber drivers should be treated as employees instead of independent contractors.

While the judge carved out some exceptions, for the most part he allowed the case to move forward in a way that could cover the claims of as many as 160,000 or more Uber drivers. A similar case is unfolding in federal court in San Francisco against Lyft, and Chen’s ruling could be used as fodder to back arguments for class-action status for those drivers.

Lyft and Uber drivers have mounted major legal challenges to the business model, arguing that they should be classified as employees, rather than independent contractors, a distinction that entitles them to strong protections and benefits under California law and threatens the cost structure of the so-called sharing economy.

The companies stress that drivers can work as much as they want and when they want, a come-and-go-as-you-please form of employment that gives them a financial slice of each Uber or Lyft ride they provide. In fact, the companies note that many drivers are signed on the same day with multiple ride-sharing apps, including Uber, Lyft and Sidecar.

Uber, in urging Chen to reject allowing the case to proceed on behalf of all California drivers, presented testimonials from about 400 drivers who indicated they preferred to retain their independent status. But the judge rejected that evidence in Tuesday’s ruling, concluding it represented a “statistically insignificant” percentage of affected Uber drivers.

The stakes are high for Uber, which already has suffered setbacks in its bid to preserve the right to classify its drivers as independent contractors with less legal protection.