Uber’s CEO says it might shut down temporarily in California if the state’s court doesn’t change its ruling that drivers on the platform be classified as full-time employees rather than independent contractors.
The revelation came via an MSNBC-televised interview Wednesday with Uber CEO Dara Khosrowshahi.
The CEO told news anchor Stephanie Ruhle that the rideshare company plans to appeal California’s preliminary injunction, which would require Uber and Lyft to provide more employment benefits to workers.
“If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly,” Khosrowshahi said. “So I think Uber will shut down for a while.”
Uber and Lyft have just over a week left to appeal the injunction.
If the appeal doesn’t work, the app would shut down until November, when California residents vote on Proposition 22, which would exempt drivers from being considered employees, Khosrowshahi said.
“It would be really unfortunate,” the CEO said. “It would put vast swaths of our drivers out of work without the opportunity to earn.”
He also said Uber drivers don’t want to be full-time employees.
Uber’s business model relies on providing cheap rides, and prices would likely be “much higher” if the company spends more on drivers, Khosrowshahi said.
The news of Uber’s possible California departure comes just days after a judge in the state ordered Uber and Lyft to reclassify their workers in order to comply with Assembly Bill 5. The law passed in 2019 so that gig economy workers have access to health insurance, paid sick leave and unemployment.
As independent contractors, Uber and Lyft drivers don’t have access to these benefits.
