SAN FRANCISCO—Uber CEO Dara Khosrowshahi indicated the company is likely to shut down temporarily for a few months in California if a new court ruling stating they must classify all of their drivers as full-time employees is not overruled.
On Monday, August 10, Uber and Lyft were ordered by a California judge to brand all of their drivers as full-time employees of their companies, until now they have been considered independent contractors.
“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 told MSNBC Wednesday, August 12d.
The ruling made by San Francisco Superior Court Judge Ethan P. Schulman will not go into effect immediately, as both companies have stated they will be appealing to a higher court in hopes of overturning Schulman’s verdict.
The preliminary injunction is a result of litigation by California Attorney Xavier Becerra and the cities of Los Angeles, San Diego, and San Francisco, all of which issued a lawsuit against Uber and Lyft in May to implement one of California’s labor laws, Assembly Bill Five. This bill establishes stern practices for how workers for any company are labeled as an independent contractor or full time employee.
Lawyers for both Uber and Lyft are also stating that drivers are nonessentials for their businesses. They argue that the companies are multi-faced, and can succeed in other aspects outside of transportation.
Uber has 10 days to begin adhering to the ruling Khosrowshahi calls “unfortunate.” If the ruling holds strong, Khosrowshahi told MSNBC the company’s plan is to halt operations until November, when voters in California are able to vote on another bill, Proposition 22, which would establish Uber drivers as independent contractors who receive a few extra benefits.