Uber CEO Dara Khosrowshahi said Tuesday that if the ride-hailing company has to reclassify its drivers as employees in California, it’ll do its best to adjust. And one of those adjustments could be exiting the state.
“We are looking at all of our options,” Khosrowshahi said during the Wall Street Journal Tech Live conference. “We are going to do our best to operate in California.”
The CEO’s statements come as the company is battling California over the status of its drivers and delivery people. After the state last year passed the law known as AB5, which requires gig workers to be reclassified as employees, Uber, Lyft, DoorDash, Instacart and Postmates launched a $188 million ballot measure campaign to get exempted from the law. That ballot measure, Proposition 22, will be decided by California voters on Nov. 3.
This battle between the gig economy companies and state regulators is likely to have national implications. Other states, like Washington, Oregon, New York and New Jersey, are mulling similar legislation. For regulators, it boils down to creating more labor protections for gig workers. As independent contractors, these workers don’t have minimum wage, health care, sick leave or disability insurance, even if they work full time.
Over the past week, drivers opposed to Proposition 22 have rallied in cities across California holding press conferences and car caravan protests. They say the ballot measure will “lock” them into “sub-minimum wages” and it’s crucial that it doesn’t pass.
“We will not allow these billion dollar companies to buy their own laws,” Luz Laguna, a Los Angeles-based Uber driver and organizer with driver advocacy group Mobile Workers Alliance, said in a statement. “The voters we’ve talked to are standing with workers, not Silicon Valley executives.”
This isn’t the first time Uber has floated the idea of leaving California if made to reclassify drivers as employees. After the state issued an injunction in August requiring the companies to reclassify their workers, Uber and Lyft said they’d suspend operations in the state.
The injunction stemmed from a lawsuit the state filed against Uber and Lyft in May, which said the companies had violated AB5 and “exploited hundreds of thousands of California workers” by misclassifying drivers as independent contractors. Just hours before the injunction went into effect, a judge issued a stay on the order until later this year.
On Tuesday, Khosrowshahi didn’t outright say that Uber would pull out of California if Proposition 22 fails, but instead said he’s looking at all scenarios, including suspending operations.
Khosrowshahi said that if the ballot measure doesn’t pass and Uber stays, he expects ride prices to increase, especially in rural areas. He added that driver earnings are the majority of Uber’s costs. Nevertheless, he said he’s hopeful Proposition 22 will win.
“We’re standing on the side of right here,” Khosrowshahi said. “And usually the right side wins.”