Uber could suspend service in California by August 20, after a California Superior Court judge ruled that Uber and Lyft must reclassify “app-based drivers” as employees, and not independent contractors.
However, while suspending service in California would be a devastating blow to drivers across the state, Uber Technologies CEO Dara Khosrowshahi says the company may do so — simply based on logistics.
“We can’t go out and hire 50,000 people overnight,” Uber CEO Dara Khosrowshahi told the podcast Pivot School. “Everything that we have built is based on this platform that … brings people who want transportation or delivery together. You can’t flip that overnight.”
In his ruling, California Judge Ethan P. Schulman found that transportation companies Uber and Lyft did not comply with portions of Assembly Bill 5.
AB 5, which was signed into law in 2019, established a three-factor test to decide a worker’s status as an independent contractor:
- The worker is free from the hiring company’s control and direction in the performance of work.
- The worker is doing work that is outside the company’s usual course of business;
- The worker is engaged in an established trade, occupation, or business of the same nature as the work performed.
As bipartisan mayors of CA’s 2/3 largest cities, we share serious concern for the exodus of ride-share companies statewide. This Friday, nearly 1M gig workers will lose their income in the Golden State—deepening the economic pain felt in our communities during this crisis. pic.twitter.com/QFTwlkRs5k
— Sam Liccardo (@sliccardo) August 19, 2020
In an attempt to prevent Uber from suspending service in California, San Jose Mayor Sam Liccardo and San Diego Mayor Kevin Faulconer issued a statement urging action be taken.
In a Tweet, Liccardo said he shared concern for the potential “exodus” of ridesharing companies occurring across the state, which thousands of residents rely on financially, and as a mode of transportation.
“As bipartisan mayors of CA’s 2/3 largest cities, we share serious concern for the exodus of ride-share companies statewide. This Friday, nearly 1M gig workers will lose their income in the Golden State—deepening the economic pain felt in our communities during this crisis.”
In an undated blog post, Uber addressed its plan to move forward.
“We may have to temporarily suspend ridesharing in California starting this week. The California Attorney General obtained a court order that requires rideshare companies to hire drivers as employees — immediately — or else shut down,” the post reads.
“We appealed this decision, but if we are not successful in our appeal, we will need to temporarily shut down by Thursday night.”
Despite filing appeals, the company may have no choice to but to suspend service.
Still, voters in California may have the power to change how AB 5 is translated and could ultimately override the Assembly bill.
If California voters pass Proposition 22, the App-Based Drivers as Contractors and Labor Policies Initiative, it would consider app-based drivers to be independent contractors.