Home / Business / Uber CEO says the service will likely be temporarily shut down in California if it is forced to classify drivers as employees – NBC Bay Area

Uber CEO says the service will likely be temporarily shut down in California if it is forced to classify drivers as employees – NBC Bay Area



Uber would probably suspend temporarily for several months if a court does not choose a recently decided requirement that it classify its drivers as full-time employees, said CEO Dara Khosrowshahi in an interview with Stephanie Ruhle on Wednesday on MSNBC.

“If the court does not consider, in California, it is hard to believe that we can quickly change our model to full-time,” Khosrowshahi said.

Uber and rival Lyft both have about a week left to appeal a preliminary ban granted by a California judge on Monday that will ban companies from continuing to classify their drivers as independent workers. Following the order, Uber and Lyft are required to provide benefits and unemployment insurance for workers.

California̵

7;s attorney general and three city attorneys filed lawsuits against companies under the state’s new law, Assembly Bill 5, which aims to provide benefits to players who play the core of a company’s business by classifying them as employees. In his decision to grant the preliminary injunction, the judge rejected the view that drivers should be considered outside the companies’ companies and called the logic “a classic example of circular reasoning.”

Uber and Lyft both said they would appeal the decision during the 10-day period before it takes effect.

Instead of classifying drivers as employees, Khosrowshahi has advocated what he calls a “third way” that would maintain drivers’ independence while allowing companies some protection without risking being considered a full-time employer. In a New York Times pending a court ruling, Khosrowshahi said companies like Uber could pay into a fund that workers could dive into paid leave on health care benefits based on the number of hours they work.

Khosrowshahi said on Wednesday that his plan B if Uber could not win on appeal would be to temporarily halt the service in California. While he said Uber would later resume service in the state, it would likely be more centered in cities, which could mean limited availability in less concentrated areas such as suburbs.

If the appeal does not work for Uber, it will be chosen to decide its fate. Khosrowshahi said that if so, the service would likely shut down in California until November, when state voters decide on Proposition 22, which would free drivers of app-based carriers and delivery companies from being considered employees. Uber has claimed that drivers prefer to work as independent contractors, although California AG Xavier Becerra dismissed that claim as a “false argument.”

Khosrowshahi stressed that break service in the state would leave thousands of drivers without the revenue they would normally earn on Uber. Equestrianism has still been down during the pandemic anyway, which the judge said the ban came at what is “the least worst time” for Uber and Lyft to adapt their business models.

Becerra said in an interview with CNBC on Tuesday that he was worried about the potential for Uber to leave the state as a result of the order.

“Any business model that relies on workers who change cards to do so probably should not be anywhere, whether in California or otherwise,” he said.

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SE: California Attorney General on Court Order Requesting Uber, Lyft to Classify Drivers as Employees

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