Uber Faces Temporary Shutdown in California Over Drivers Status

Uber might shut down temporarily in California after a judge ruled earlier this week that Uber and Lyft should designate its drivers as employees.

CEO Dara Khosrowshahi said in a Wednesday interview on MSNBC, that if the court doesn't reconsider the ruling in California, it's hard to believe we'll be able to quickly turn our model into a full-time job.

"We will have to shut down until November," Khosrowshahi said, adding that the reimagined version of Uber in California would lead to "much smaller service with higher prices."

Judge Ethan Shulman of the San Francisco County Superior Court ruled on Monday that there was a high probability that both Uber and Lyft misclassified drivers as contractors, not employees.

The ruling represents a major setback for the two ridesharing giants, which have been fighting a new law in California that would grant their  drivers the valuable benefits that come with employee status. Meantime, Schulman suspended the sentence for ten days, giving the companies time to appeal the decision.

California Attorney General Xavier Becerra has filed the lawsuit against Uber and Lyft for not complying with the new law, formerly known as AB5, which went into effect in January.

Khosrowshahi said that if Uber would lose the appeal, the company will move to halt service in California through November, and it would resume service in California with a limited capacity focusing more on major states.

In November, a state ballot will be set to exempt drivers from there employees status, giving hope for Uber to resume operation in California.

Meantime, Uber stock price dropped 1.15% to $30.84 following the California ruling.