The ridesharing company may soon be forced to treat its drivers as full employees.
Uber Technologies Inc. CEO Dara Khosrowshahi has threatened to temporarily shut down his company’s service in California if it is no longer able to classify its drivers as contractors.
The CEO’s remarks came during an interview with MSNBC on Wednesday. “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.
Following a defeat in court earlier this week, Uber and fellow ridesharing company Lyft have been issued a preliminary injunction preventing them from classifying their drivers as contracted freelancers instead of paid employees in California.
Under the state’s Assembly B5 (AB5) labour law, it is more difficult for firms to classify their employees – who would otherwise be entitled to a minimum wage and benefits – as contractors. This poses a challenge to the business model of companies like Uber, which refers to drivers on its network as contractors.
Uber has announced that it will appeal Monday’s court ruling. Should it be upheld, the company may be forced to pay its drivers tens of millions in compensation, as will other businesses which fail to properly classify their workers as employees under AB5.
Khosrowshahi became chief executive of Uber in August 2017, reportedly having received almost $200 million from the company to succeed former CEO Travis Kalanick.
