Uber May Be Temporarily Shutting Down in California

According to an interview this week with Uber’s CEO Dara Khosrowshahi, the ride hailing company may be shutting down service in California temporarily if it is forced to classify drivers as employees.

Khosrowshahi said in an interview with Stephanie Ruhle on Wednesday on MSNBC that this may be the move the company makes if a court does not overturn a recent ruling requiring it to classify its drivers as full-time employees.

Both Uber and rival Lyft both have about a week left to appeal a preliminary injunction granted by a California judge that will prohibit the companies from classifying their drivers as independent workers.

Khosrowshahi said Uber would likely shut down temporarily for several months if the court does not overturn the ruling. “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,” the CEO said.

California’s attorney general and three city attorneys brought the lawsuit against Uber and Lyft under the state’s new law, Assembly Bill 5, that aims to provide benefits to gig workers core to a company’s business by classifying them as employees.

In his decision on Monday granting the preliminary injunction, the judge rejected the notion that drivers should be considered outside the course of the companies’ businesses, calling the logic “a classic example of circular reasoning.”

Both companies said they would appeal the ruling during the 10-day period before it goes into effect.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.