Uber's CEO says it will have to double prices in some cities if California voters reject its bid to avoid classifying its drivers as employees
- In two weeks, California voters will decide on Proposition 22.
- The ballot measure is backed by
Uberand other gig-work companies and is in response to the state's law requiring them to classify many workers as employees rather than contractors.
- If passed, the companies will pay into a floating benefits fund that will follow workers across apps and jobs, while maintaining flexibility.
- If forced to classify workers as employees, however, Uber and its competitors would face massively higher costs.
- To make up for that, CEO Dara Khosrowshahi said Tuesday, fares would rise — in some cases as much as 100%.
Uber's bid to replace California's gig-worker law with its own proposal is in the final stretch, and the company is warning that prices could skyrocket if the measure fails in two weeks.If voters reject Proposition 22, which would provide a floating pool of benefits for gig-workers across multiple apps including Uber's competitors, the company would likely be forced to classify drivers as employees. That means higher costs, which would ultimately be passed on to consumers in the form of fare increases, as the company remains under pressure to turn a profit.
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Khosrowshahi pointed to Switzerland, where in September a Geneva court ruled couriers were employees, not contractors. "That resulted in 77% of couriers being out of work," he said.The flexibility both within Uber's app to work whenever and wherever they'd like, and to work across multiple apps, has been central to the company's argument against classifying drivers as employees, even as a court ordered it to do just that over the summer. Wall Street analysts have estimated the cost of that change could effectively bankrupt the company.
Opponents of the heavily funded ballot measure Prop. 22 say the companies' arguments don't hold water."There is nothing in current state law that would require Uber, Lyft and other gig companies to schedule shifts or limit driver flexibility,"
"Recent engagement and macro data suggest the US continues to see a slow recovery, especially on the West Coast, while recovery seems to have flattened in some international cities," JPMorgan analysts said last week.
Uber will report its third-quarter financials on November 5, providing the most granular insight yet on its recovery since June."We're looking at all of our options," Khosrowshahi said at the conference. "We're in the
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