Uber has warned it will have to shut down in California if it is forced to classify drivers as employees instead of independent contractors.
The ride-hailing giant is currently appealing against a Supreme Court judgment in the state that requires the company to recognise its drivers as employees and give them employment protections as a result.
On Wednesday, the company’s CEO Dara Khosrowshahi told MSNBC that Uber would struggle to immediately change its business model, as required by Californian law, and would temporarily suspend its business if it cannot overturn the ruling.
Image: Uber is battling against drivers’ rights in California and the UK
The company is fighting a similar case in the UK, where the Supreme Court is expected to make a final decision in a five-year-long legal battle over Uber giving its drivers basic employment protections, including the minimum wage and holiday pay.
Uber could be forced to pay tens of millions in compensation to impacted workers, as may other firms which fail to class their drivers and couriers as employees.
The judgment will reverberate across the so-called gig economy when it is delivered in the autumn – and Mr Khosrowshahi’s stance suggests the company may cease operating in the UK too, at least for a period, as a result.
“We think the ruling [in California] was unfortunate. We respect, obviously, the law and the court and the judge,” he said.
More from Uber
“If the court doesn’t reconsider then, in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly, so I think Uber will shut down for a while.”
Image: Uber and Lyft have sponsored a ballot initiative in California
As part of the fight against the ruling – which has been accompanied by a committed publicity campaign, including an op-ed in The New York Times – Uber and Lyft have sponsored a ballot initiative in California.
A ballot initiative is a form of direct democracy available in some US states which means that a petition to amend a particular statute can bring about a public vote on the matter.
The companies have managed to add Proposition 22 to the ballot paper in California, which will ask voters – alongside their vote for president – whether “app-based transportation and delivery drivers” should be exempt from laws classifying them as employees rather than independent contractors.
Mr Khosrowshahi said that if this proposition fails and Uber was forced to classify drivers as employees, then the service would be much smaller, more expensive, and geographically limited to city centres.
Uber has similarly consistently appealed decisions against its employment practices in the UK after a tribunal found it unlawfully classed drivers as independent contractors.
Instead, the tribunal found that drivers and couriers should be classed “limb (b)” workers, crucially allowing them access to holiday and sick pay, as well as collective bargaining rights.
Last year, Sir Terence Etherton, the second most senior judge in England and Wales, said in the High Court that the tribunal was “not only entitled, but correct” to class Uber drivers as workers.
At the time he said: “Not only do we see no reason to disagree with the factual conclusions of the [tribunal] as to the working relationship between Uber and the drivers, but we consider that [it] was plainly correct.”
During the course of the appeals process, the company has not implemented the tribunal’s findings – which the High Court upheld by a majority of two to one.
Image: In the UK a Supreme Court ruling is due this autumn
At the time a spokesperson for Uber told Sky News: “This decision was not unanimous and does not reflect the reasons why the vast majority of drivers choose to use the Uber app.
“We have been granted permission to appeal to the Supreme Court and will do so.”
The App Drivers & Couriers Union (ADCU) has warned that Uber winning the case could result in a widespread collapse in worker rights across the economy “with millions of people pushed permanently into precarity”.
It said it had received a letter from the Certification Office which says the ADCU could have its trade union listing revoked if Uber wins the case as its members would no longer be classified as workers.
Yaseen Aslam, the union president and lead claimant in the legal action, said: “This is our final showdown with Uber but the stakes could not be higher for everyone.
“If Uber wins, there will be an unseemly rush by greedy employers to collapse employment as we know it and Uber-ize the entire economy,” Mr Aslam said.
“Uber drivers and other gig economy workers would be robbed of the right to unionise. I trust we will prevail but the government and Uber should never have let it come to this.”
Source : Sky News