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Uber could be forced to shut down its ride-hailing app in California for several months if a court doesn’t overturn a recent ruling that classifies its drivers as full-time employees, CEO Dara Khosrowshahi said in an interview with MSNBC.
“It’s hard to believe we’ll be able to switch our model to full-time employment quickly,” Khosrowshahi said, noting it would force the company to temporarily shut down. Khosrowshahi’s comments are consistent to language in a motion filed Tuesday by Uber following the court’s ruling.
Uber shares were down about 1.4% in midday trading.
On Monday, California Superior Court Judge Ethan Schulman granted a preliminary injunction forcing Uber and Lyft to reclassify its drivers as employees. This order is set to go into effect in 10 days. The judge acknowledged that the order would change the nature of Uber and Lyft’s business practices in “significant ways” and implementing the injunction would be “costly.” However, those hardships weren’t enough to sway the court from classifying drivers as employees, a decision that would force Uber and Lyft to provide unemployment insurance and other benefits.
California Attorney General Xavier Becerra, along with city attorneys from Los Angeles, San Diego and San Francisco, brought the lawsuit against Uber and Lyft to force the companies to comply with AB 5.
Uber’s attorneys requested in its motion filed Tuesday that an injunction should be stayed while the Court of Appeals makes its decision over whether the ruling should stand. The attorneys argued that “Uber will almost certainly be forced to shut off the Rides platform in California if the injunction goes into effect, which would irreparably harm Uber and all who rely on its Rides app to generate income for them and their families — particularly in the midst of a pandemic.”