July 17 (Reuters) - Uber Technologies Inc (UBER.N) must face a California lawsuit claiming it should have covered UberEats drivers' work-related expenses, the state's top court said on Monday, in what could be a major blow to companies in the largest U.S. state and a win for labor advocates.

The California Supreme Court in a unanimous ruling said UberEats driver Erik Adolph did not give up his right under state law to sue on behalf of a large group of workers even though he signed an agreement to bring his own work-related legal claims in private arbitration.

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Adolph sued Uber in 2019, claiming the company misclassified UberEats drivers as independent contractors rather than employees, who must be reimbursed for work expenses under California law.

A unique California law called the Private Attorney General Act, or PAGA, allows workers to sue for employment law violations on behalf of the state and keep one-quarter of any money they win. The rest goes to the state to fund an agency that enforces labor laws.

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The California Supreme Court said nothing in that law bars workers from pursuing claims on their own behalf in arbitration while separately litigating large-scale claims in court.

The decision likely undermines the significance of a 2022 U.S. Supreme Court ruling involving Viking River Cruises that said companies could force individual PAGA claims into arbitration, and could mean that California...

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