Ride-hailing app Uber is facing problems on both coasts of America today, with the news that the California Labor Commission has ruled that its drivers are employees rather than contractors, and reports that almost 500 of its cars have been seized in New York due to illegal pickups.

The decision in California comes following months of debate and legal challenges between Uber and its drivers. The company has always argued that it is “nothing more than a neutral technology platform” and that any drivers are contractors, rather than official employees.

The ruling means Uber will face higher costs in California due to requirements like Social Security contributions, workers compensation and unemployment insurance. It also opens the firm up to similar challenges in other states, as well as around the world.

The commission was ruling based on an appeal by Uber of a labor commissioners award of around $4,000 (£2,500) in expenses to a San Francisco-based driver, who filed a claim in September after working for as an Uber driver for just over two months in 2014.

Meanwhile, in New York, 496 cars have been seized from Uber drivers in the past month and a half for taking illegal street hails. According to the New York Post, the seizures have been made largely at the three airports in the region, following a crackdown by authorities.

Uber drivers are only licensed to act as minicabs, meaning all rides have to be pre-booked, and pickups cannot be made in the same way licensed taxis can. Taxi drivers around the world have protested against Uber, which they see as encroaching on their business.

“Street hails are not permitted on the Uber platform –  period,” said Matt Wing, spokesperson for Uber. “This is a small group of bad actors and the violations add up to less than one hundredth of one per cent of our rides over the same time period.”

“The fact that the TLC (Taxi and Limousine Commission) has seized such a staggering amount of Uber cars in such a short period of time only shows that more oversight is needed,” said Tweeps Phillips Woods, executive director of the Committee for Taxi Safety.