Uber May Halt All California Service Should Rideshare Employee Appeal Fail

On Wednesday, Uber CEO Dara Khosrowshahi said that Uber services in California would shut down until November if an Appellate judge doesn’t overturn a Superior Court ruling forcing rideshare companies to recognize all workers as employees.

A possible three months without Uber service in California

Superior Court Judge Ethan Schulman ruled on Monday that Uber and Lyft were violating California law by not giving workers basic labor and employment protections. Under Judge Schulman’s ruling, all rideshare drivers must now be considered employees, which includes expensive benefits and could implement fixed hours and other major changes.

Uber and Lyft reacted to the news negatively on Monday and vowed to appeal the ruling. But on Wednesday, Khosrowshahi elevated their concerns and threatened more direct action.

“We will have to shut down until November,” said Khosrowshahi during an MSNBC interview. “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. So I think Uber will shut down for a while.

“That’s a reality, so it’s not a game of chicken one way or another. It’s really up to the courts and we’re going to comply with the law, and we will look to get going again. It would be really unfortunate. It would put vast swaths of our drivers out of work without the opportunity to earn.”

Khosrowshahi also noted that the vast majority of Uber drivers don’t want to be employees, with flexible hours and cheaper prices allowing a steady supply of customers and the ability to set their own schedule.

AB 5 and Proposition 22

Critics have said that this is close to blackmail and that the delay is being threatened not because of time needed to adjust but to wait on the results of an upcoming proposition on the ballot that would exempt rideshare companies from the AB 5 law that reclassified many independent contractors as employees.

“We fought so long for this, and now we see them pulling every stop in the book to not treat drivers fairly,” explained Orange County rideshare driver and organizer Christina Munoz in a California Globe interview. “When we got AB 5 passed, we thought that was it, but they kept fighting and suing and appealing. And, if this appeal fails, they’re willing to lose out on a ton of money for nearly 3 months just on the chance that Proposition 22 passes.

“We need healthcare and we deserve to have fair workers rights. We have some drivers working 80-90 hour weeks by driving into San Francisco for days at a time only occasionally napping. There are others now risking COVID-19 infection and death just to drive people around. We deserve protections under the law. Not to be put at severe risk or put out of work for three months when unemployment remains high.”

However, Khosrowshahi also said that, barring a successful appeal and the passage of Prop 22, that Uber would comply with the law, but would severely constrict the company and put many out of work. Under an unaltered and live AB 5, Uber would have a much smaller presence in California, limited mainly to city centers at much higher prices. The CEO likened it to what Uber was when it first started out – a private car service to rival taxis.

Uber and Lyft are set to appeal the Superior Court ruling in the next several days. Should the appeal fail and the rideshare companies fall under AB 5, both rideshare companies may stop California service as soon as late August.