Uber Shutting Down In California? CEO Says Temporary Closure May Be Needed If Court Ruling Upheld

Uber may need to shut down operations in California temporarily if a recent court order is upheld, classifying its workers as full-time employees. CEO Dara Khosrowshahi told MSNBC the requirement would force Uber to cease operations in the state for several months to make the change.

“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, adding that the company likely would “shut down until November.”

In a ruling from Monday, Superior Court Judge Ethan Schulman in San Francisco said there was an “overwhelming likelihood” that Uber and its competitor Lyft had wrongly classed it drivers, the largest segment of their workforces, as contractors rather than full-time employees. Enforcement of the ruling was put off for 10 days pending an appeal.

Khosrowshahi also said the ruling would result in Uber running a smaller operation in California with fewer drivers and higher prices. Uber and Lyft have gotten out of paying their workers considerably more in states like California by classifying them as contractors since California law grants full-time employees a considerable number of rights. Schulman ruled the practice was in violation of state law.

Khosrowshahi argued the ruling would ultimately have a negative impact on its drivers and force the company to fire a “vast swath.” Schulman countered this argument in his ruling, saying Uber’s refusal to comply with state law has made the problem worse.

“But if the injunction the people seek will have far-reaching effects, they have only been exacerbated by defendants’ prolonged and brazen refusal to comply with California law,” Schulman wrote. “Defendants may not evade legislative mandates merely because their businesses are so large that they affect the lives of many thousands of people.”