Uber could be forced to close its greeting app in California for several months if a court does not overturn a recent ruling classifying its drivers as full-time employees, CEO Dara Khosrowshahi said in an interview with MSNBC.
“It is hard to believe that we will be able to transfer our model to full-time employment quickly,” Khosrowshahi said, noting that he would force the company to close temporarily. Khosrowshahi’s comments are in line with the language in a motion filed Tuesday by Uber following the court ruling.
Uber shares were down about 1.4% in midday trading.
On Monday, California High Court Judge Ethan Schulman issued a precautionary measure forcing Uber and Lyft to reclassify its drivers as employees. This order is set to take effect within 10 days. The judge acknowledged that the order would change the nature of Uber and Lyft’s business practices in “significant ways” and that enforcing the order would be “costly”. However, those difficulties were not enough to get the court to waive the classification of drivers as employees, a decision that would force Uber and Lyft to provide unemployment and other benefits.
California Attorney General Xavier Becerra, along with city attorneys from Los Angeles, San Diego and San Francisco, filed lawsuits against Uber and Lyft to force companies to comply with AB 5.
Uber’s lawyers demanded in her motion Tuesday that an order should stand while the Court of Appeals makes its decision whether the decision should stand. Lawyers argued that “Uber will almost certainly be forced to shut down the Rides platform in California if the order goes into effect, which would irreparably hurt Uber and anyone who relies on its Rides app to generate revenue for them and their families – especially in the midst of a pandemic. “