Uber may suspend California operations, CEO warns
Forcing Uber to consider drivers as employees could lead the company to suspend its operations in California, where it is based, the company's chief executive, Dara Khosrowshahi, said on Wednesday.
His comment comes after a court gave Uber and rival Lyft until the middle of next week to comply with a new California law that requires them to consider drivers as employees rather than contract workers.
If the court does not reconsider, then in California it is hard to believe that we will be able to quickly change our model to full-time employment, he told MSNBC.
Essentially, we will have to shut down Uber until November, when the voters will decide, he added.
Uber and Lift support a state referendum to overturn that law. In return, they promise to provide social benefits to their independent drivers.
The order came to them Monday when a judge admitted a lawsuit brought by California Attorney General Xavier Becerra and three cities, including San Francisco, where Uber and rival Lyft are based.
The lawsuit asks that both comply with a state law in force since the beginning of the year that requires that self-employed or independent workers, such as those in driver services required by virtual platforms, be considered employees and consequently eligible for unemployment or insurance benefits.
Uber and Lyft plan to appeal to buy time.
One plan Uber would implement would be to suspend operations in California and eventually resume them with fewer and cheaper services, likely focusing on downtown or suburban cities, according to Khosrowshahi.
Both companies argue that most drivers want to remain independent even when looking to make more profit.