Uber Weighs California Overhaul if Ballot Measure on Workers Fails

Uber CEO Dara Khosrowshahi says the ride-hailing company’s drivers largely back Proposition 22, which would exempt them from being classified as employees, during WSJ Tech Live 2020. Photo: Anushree Fadnavis/Reuters

Oct. 20, 2020 12:44 pm ET

Uber Technologies Inc. UBER 6.24% is considering an overhaul of its business in California if voters reject a ballot measure that would prevent the ride-hailing company’s drivers from being classified as employees.

“We are looking at all our options,” Uber Chief Executive Dara Khosrowshahi said, without elaborating, during The Wall Street Journal’s annual Tech Live conference, held remotely on Tuesday. “We will do our best to operate in California…Where in California we will operate is a question mark, and the size and scale of business will be a big question mark,” he said.

The state implemented a law on Jan. 1 that seeks to reclassify ride-share and food-delivery drivers as employees, making them eligible for minimum wage, sick days and health insurance. Uber, Lyft Inc., DoorDash Inc. and others have collectively raised around $200 million to promote a ballot measure—the most expensive in California’s history—on Election Day that asks voters exempt them from the law.

Demonstrators in Los Angeles on Oct. 8 called to vote down Proposition 22, a ballot... — Demonstrators in Los Angeles on Oct. 8 called to vote down Proposition 22, a ballot measure backed with a $200 million campaign by a coalition of app-based services including Uber.

Photo: mike blake/Reuters

Uber and its peers have said that the law would force them to make drivers work pre-scheduled shifts, robbing them of the flexibility they currently enjoy. Uber has said it would be able to hire just a fraction of its more than 200,000 drivers. Mr. Khosrowshahi on Tuesday said prices for consumers would rise between 25% and 100%.

“These are not made-up estimates,” he added.

Uber’s core ride-hailing service has been battered during the pandemic, while its smaller food-delivery business has soared. Global rides volume was down 50% year-over-year last month, Mr. Khosrowshahi said, with Hong Kong leading its recovery.

Uber’s food-delivery bookings more than doubled in the second quarter of the year, and Mr. Khosrowshahi said the business continues to see growth “well over 100%.”

Uber reports third-quarter results on Nov. 5, days after the election.