Uber says it will suspend service in California if it is forced to treat drivers as employees

Olivia Rudgard
·2-min read
Supporters of the law circle the Capitol during a rally in Sacramento, California, last year. - Rich Pedroncelli /AP
Supporters of the law circle the Capitol during a rally in Sacramento, California, last year. - Rich Pedroncelli /AP

Uber says it will suspend its service in California for several months if it is forced to comply with a state law requiring it to treat its drivers as employees.

Chief executive Dara Khosrowshahi said that enforcement of the law, which sets strict limits on when a company can treat workers as private contractors, would mean the company "essentially shuts down" until November, when California is due to vote on a proposal to overturn it. 

Mr Khosrowshahi told MSNBC: "We think we comply by the laws. But if the judge and the court finds that we're not, and they don't give us a stay to get to November, then we'll have to essentially shut down Uber until November when the voters decide."

Uber is currently being sued by California and several of its cities for failing to follow the law. It argues that it does not have to because its drivers are not "core" to its business, one of the conditions. 

But on Monday a San Francisco judge said this argument "flies in the face of economic reality and common sense" and granted an injunction compelling the company to immediately fall in line with the regulations. The company and its competitor Lyft, which is also part of the lawsuit, have 10 days to appeal. 

A ballot measure organised and funded by the two companies is due to go in front of California voters in November when the US goes to the polls. It would overturn the law and give drivers certain protections such as a guaranteed income at 120pc of California's minimum wage. 

Critics said the move echoed Uber's heavy-handed approach to regulators and cities in  earlier years, when it would threaten to leave jurisdictions that tried to restrict it. 

Veena Dubal, professor of law at the University of California, Hastings and a prominent supporter of regulation, said: "We cannot write laws or enforce them selectively to please multi-billion dollar companies that are unprofitable and hemorrhaging money."