Uber Warns It Could Suspend Service In California By Thursday
LOS ANGELES (CBSLA) –Uber informed its California users Tuesday that service could be suspended in the state as early as Thursday in response to an ongoing legal battle over how the rideshare giant classifies its drivers.
The company sent out a push alert to riders warning them of the possible shuttering of service.
Then, in a blog post, the company wrote that it may shut down by Thursday night if it is "not successful in its appeal" of last week's ruling by a federal judge.
On Aug. 10, a judge ruled that Uber and Lyft must classify their drivers as employees rather than independent contractors. That ruling is scheduled to take effect Thursday.
On Aug. 12, Uber CEO Dara Khosrowshahi said that if the company's court appeal fails, Uber will be forced to temporary shut down. At the time he did not provide a timeline for when that might happen.
"If the court doesn't reconsider, then in California, it's hard to believe that we'll be able to switch our model to full time employment quickly," Khosrowshahi said. "So I think Uber will shut down for a while."
The ruling was in response to a lawsuit brought by several city attorneys and California Attorney General Xavier Becerra, which alleged that the companies violated Assembly Bill 5 (AB 5) and were misclassifying drivers' employment statuses to prevent them from receiving proper compensation and benefits.
Last September, the California Legislature passed the controversial AB 5, a law which requires companies who employ gig workers, such as rideshare drivers, to reclassify them as employees, affording them benefits including minimum wage, overtime and unemployment insurance.
Despite all the legal wrangling, California voters are set to decide the fate of AB 5 in less than three months when they vote on Proposition 22.
Prop. 22, a bill heavily pushed by Uber and Lyft, would overturn provisions of AB 5 specifically relating to app-based drivers.
Under Prop. 22, instead of being categorized as employees, drivers for app-based companies would remain independent contractors but be provided with "alternative benefits," including a guaranteed minimum level of pay and healthcare subsidies, all based on how much they drive. It would also restrict local regulation of app-based drivers, criminalize impersonation of such drivers and require background checks.
"We know that riders rely on Uber to get around, and drivers rely on the Uber app to earn income," the company wrote in its blog. "We wanted to let you know that this is a possibility, so you can plan accordingly."