Two days after California judge granted a preliminary injunction requiring ride-hailing giant Uber and Lyft to classify drivers as employees in California, Uber CEO Dara Khosrowshahi has reportedly announced that Uber could suspend its operations in the Golden State for months.
Sources cite that Lyft and Uber both have about a week left to appeal a preliminary injunction made by an authorized California Judge that will prohibit the ride-hailing companies from classifying their drivers as independent workers. The order requires Uber and Lyft to offer unemployment insurance and other benefits for workers.
If the court does not reconsider the order, the CEO said the plan is to halt Uber operations until November, when voters in California will vote on Proposition 22, which could classify drivers as independent contractors but could provide other benefits.
This move would not only maintain drivers’ independence but also allow companies to offer additional benefits without risking being viewed as full-time employers.
Three city attorneys and attorney journal of California brought the new lawsuit against companies under state’s law, Assembly 5 that aims to offer benefits to gig workers core to a firm’s business by classifying them as full-time employees.
In the statement granting the preliminary injunction, the judge forbade the notion that drivers should be considered outside the course of the ride-hailing companies’ businesses, calling the logic as ‘a classic example of circular reasoning.”
California court also rejects the ride haling giant’s claim that its drivers prefer working as independent employees by calling it a bogus argument.
Commenting on the timing of Judge’s ruling Mr. Khosrowshahi said that injunction comes at what is perhaps ‘the least bad time’ for Lyft and Uber to adjust their business models.
Lyft and Uber said that they would appeal the ruling during the 10 days before it goes into effect.