Uber, the popular ride-hailing company is thinking about a shut down in California due to a recent ruling by the court. Uber CEO, Dara Khosrowshahi said in an interview with Stephanie Ruhle that the court wants Uber to classify the drivers as full-time employees.
So if such ruling comes into effect uber will temporarily shut down its operation in California for a few months.
A preliminary injunction granted by a judge in California on Monday requires both Uber and rival Lyft to stop considering their drivers as independent contractors. Both companies are given a week to appeal against the injunction.
“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.
If the court fails to consider, both Uber and Lyft have to provide unemployment insurance and benefits for the drivers.
Temporary Uber Shut Down is an Option for the CEO
The lawsuit against the ride-hailing companies came under California’s new state law, Assembly Bill 5. The attorney general of California and 3 city attorneys sued the companies for misclassifying the drivers.
The judge rejected the concept of making drivers as contractors and classified it as “a classic example of circular reasoning.”
Moreover, the judge took the decision for a preliminary injunction.
However, the two companies want to appeal against the ruling before it comes into effect. The Uber CEO is still advocating keeping the drivers independent. He also proposed that Uber can arrange a fund from where workers can take health-benefits and other benefits depending on the working hours.
But Khosrowshahi clearly mentioned that if Uber fails against the ruling they would temporarily shut down their operation in California. Uber might resume the services later but more concentrated in cities.
Mr. Khosrowshahi also thinking about a shut down till November when the state voters will decide on Proposition 22. The proposition would classify the app-based drivers as contractors not as employees.
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