In a podcast interview, Dara Khosrowshahi rejected the notion that Uber will hire its drivers in California
In a podcast interview Wednesday, Uber CEO Dara Khosrowshahi rejected the notion his company is capable of employing all of its drivers in California, as a state judge has ordered it to do.
“We can’t go out and hire 50,000 people overnight,” Khosrowshahi said on the Pivot School podcast hosted by Kara Swisher and Scott Galloway. “Everything that we have built is based on this platform that… brings people who want transportation or delivery together. You can’t flip that overnight.”
Last week, California Superior Court Judge Ethan Schulman ordered Uber and Lyft to comply with AB5, the state law that makes it more difficult for companies to use independent contractors. In his ruling, Schulman dismissed Uber’s argument that it was a technology platform and that drivers were not core to its business. “To state the obvious, drivers are central, not tangential, to Uber and Lyft’s entire ride-hailing business,” Schulman wrote.
But the companies claim they would need to shut down operations in California completely in order to retool their businesses to comply with the law.
Khosrowshahi said the shutdown likely wouldn’t be permanent. “It’ll take time but we’re going to figure out a way to be in California,” he said. “We want to be in California.”
Khosrowshahi confirmed reports that Uber was looking into other models, like a franchise-style system in which the company would license its brand to fleet operators in California. “There’s a black car service that we have that’s based on fleets,” he said. “And we are trying to figure out exactly what we do going forward.”
Regardless, Khosrowshahi said that Uber’s response would be to limit the number of drivers allowed on its platform and to raise prices for customers after it eventually relaunches in the state. He predicted that upwards of 80 percent of those drivers who only log onto the app for 5-10 a week would no longer be able to earn on the platform. Trip prices in dense urban centers like San Francisco will go up around 20 percent, he said, while rates would be even higher in smaller, less dense cities.