Uber Technologies Inc

Uber to shut down in California temporarily if new ruling not overturned

In new court filings Wednesday, a top official of Uber Technologies Inc said the company would “almost certainly need to shut down” ride services in California for likely over a year if a judge’s groundbreaking ruling issued this week is upheld on appeal.

In a new four-page declaration, Brad Rosenthal, Uber’s director of strategic operational initiatives, stated that if the company has to recategorize the bulk of its workforce as employees instead of contractors, it will force the company to dramatically restructure its whole business model and its relationships with drivers and riders”

In a call with investors Wednesday, Lyft CEO John Zimmer said the company would probably suspend operations in the state for similar reasons as well.

On Wednesday, Uber CEO Dara Khosrowshahi said the company would stop service in its home state of California for a few months if a judge’s groundbreaking ruling this week happened to be upheld on appeal.

“We will have to shut down until November,” Khosrowshahi informed MSNBC’s Stephanie Ruhle in an interview.

On Monday, Judge Ethan Schulman of the San Francisco County Superior Court observed that there was an “overwhelming likelihood” that both Uber and Lyft had misclassified drivers as contractors instead of employees. Drivers make up the bulk of those companies’ labor forces.

The ruling was the recent twist in a lawsuit brought against the companies in May by the state’s attorney general. Schulman put a hold on enforcement of his ruling for ten days pending appeal.

In the recent filings, both companies have asked the judge to at least extend this hold period beyond 10 days while they start with the appeals process.

Khosrowshahi said that if the company is forced to abide by the judge’s ruling, it would “take a significant amount of time” for the company to retool.

Khosrowshahi said the new version of Uber in California would result in “much smaller service, much higher prices,” getting back to the early days of Uber, when it was largely a private car service that operated almost entirely in city centers.

“That’s a reality, so it’s not a game of chicken one way or another,” Khosrowshahi said. “It’s really up to the courts and we’re going to comply with the law, and we will look to get going again.”

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