Uber Chief: Law Could Idle Operations In California

Being forced to classify drivers as employees could
temporarily idle Uber operations in its home state of California,
the ride-sharing firm’s chief said Wednesday.

The comments from Uber’s chief executive Dara Khosrowshahi to
MSNBC come after a court gave Uber and rival Lyft until the middle
of next week to reclassify drivers as employees instead of contract
workers in compliance with a new state law.

“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 in the MSNBC
interview.

“We’ll have to essentially shut down Uber until November when
the voters decide.”

Uber and Lyft are backing a referendum in the state to overturn
the law, while pledging to provide benefits for a social safety net
that would keep gig workers independent

The order came Monday when a judge granted a restraining order
in a lawsuit filed by California attorney general Xavier Becerra
and three cities including San Francisco, where Lyft and Uber are
based.

The suit calls on Lyft and Uber to comply with a state law that
went into effect at the start of this year that requires “gig
workers” such as smartphone-summoned ride service drivers to be
classified as employees, eligible for unemployment, medical and
other benefits.

Uber and Lyft expect to appeal the decision, which could buy
them more time.

A backup plan for Uber would be to pause operations in
California, eventually restarting with “a much smaller service,
much higher prices” and probably focused in the center of cities or
in suburbs,” according to Khosrowshahi.

The rideshare rivals have maintained that most of their drivers
want to remain independent even if they also are looking for
benefits.

-AFP

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