Uber CEO Dara Khosrowshahi said on Wednesday that the ride-hailing service would temporarily suspend its app in California if the state continues to try to force the company to classify its drivers as employees instead of contractors.
Uber CEO Dara Khosrowshahi tells @SRuhle the ride-hailing app would have to shut down in the state of California until at least November if a judge’s ruling that Uber must treat drivers as employees instead of independent contractors fails to be appealed by the company. PIC.TWITTER.COM/NTAMMXF4CF
— MSNBC (@MSNBC) August 12, 2020
Khosrowshahi’s announced the potential move just days after a San Francisco Superior Court judge ruled that Uber and Lyft must comply with the California legislature’s bill enforcing more stringent restrictions on employee classifications.
Both companies said the will appeal the ruling, which was stayed for 10 days.
Uber and Lyft also plan to support a measure that will appear on the November ballot exempting gig companies from California’s regulations.
“We think we comply by the laws, but if the court finds that we’re not and they don’t give us a stay to get to November, then we’ll have to essentially shut down Uber until November when the voters decide,” Khosrowshahi told MSNBC.
He noted how unfortunate this loss would be for California, which is Uber’s largest market in the country.
“It would be really unfortunate at a historic time of unemployment in California,” he said.
“It would put vast swaths of our drivers out of work,” he continued. “It would take away transportation for hundreds of thousands of Californians.”
California Attorney General Xavier Becerra, however, doesn’t seem to care about the possibility of unintended consequences including economic and political fallout.
He filed a lawsuit against Uber and Lyft earlier this year, alleging that they were harming their drivers by not designating them as employees, thereby depriving them of traditional benefits, such as health insurance and workers’ compensation.
But Khosrowshahi argued that most Uber drivers prefer to be labeled as contractors because it gives them the flexibility to set their own hours.
Regardless, Khosrowshahi said California shouldn’t expect Uber to be in the state much longer unless the court grants a stay.
“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,” he told MSNBC.
