Uber and Lyft may shut down in California

Ride-share apps may pause operations in the state amid legal challenges over employment status

Uber has said it may shut down in California if it is forced to treat its drivers as employees rather than contractors, as it does now. 

That follows a ruling this week that ordered Uber and ride-sharing rival Lyft to classify their drivers as employees, with the benefits and protections that entails, rather than independent contractors, following a new law that came into force last year in the state. 

Both ride-share companies said they would appeal that ruling and have backed a November ballot to allow gig-economy workers to be treated as contractors. 

Uber's CEO Dara Khosrowshahi said the company may pause operations in the state until the results of that vote. "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," Khosrowshahi told MSNBC. "We will have to shut down until November."

He added: 'That's a reality, so it's not a game of chicken one way or another. It's really up to the courts and we're going to comply with the law, and we will look to get going again."

Lyft president John Zimmer echoed that. "We may appeal this ruling and request a further stay. If efforts here are not successful, we would be forced to suspend our operations in California," he said. 

The comments come as Lyft revealed its latest quarterly results, its first since the pandemic lockdown. Revenue was down 61% compared to the same time last year, though Lyft said business was recovering with rides up 78% in July versus April. The company posted losses of $437 million — less than last year —  and said it still expects to become profitable by the end of next year. 

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