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Uber Technologies Inc. Chief Executive Dara Khosrowshahi today said that the company may have to stop providing its services in California for a few months amid a lawsuit from the state attorney general.

The lawsuit focuses on the company’s driver policies. A law called AB5 that went into effect in California this year requires Uber and rival Lyft Inc. to reclassify their drivers from independent contractors to employees. However, Uber has not reclassified its drivers and as a result was sued by California Attorney General Xavier Becerra and a number of cities in May.

The development that led Uber to raise the possibility of temporarily pausing services occurred this week. The San Francisco County Superior Court on Monday granted the state’s request for a preliminary injunction that would block Uber and rival Lyft Inc. from continuing their current practice of classifying drivers as contractors. Enforcement of the order was put on hold for 10 days pending an appeal.

Update: Lyft also said later today that it might join Uber in suspending its services.

Should the injunction be upheld, Khosrowshahi said on MSNBC today, “we will have to shut down until November.” That month, Uber, Lyft and DoorDash Inc. are planning to put a ballot measure before California voters that would exempt the companies from having to classify drivers as employees.

Reclassifying drivers would require Uber to provide benefits such as health insurance it currently doesn’t offer. The extra costs associated with providing these benefits may make profitability harder to attain for the money-losing company, which logged a $1.8 billion net loss last quarter.

Khosrowshahi said that Uber would require a “significant” amount of time to adjust for the new requirements if it’s forced to classify drivers as employees. Moreover, he cautioned that the extra operating costs could translate into “much higher prices” for users and may force the company to limit service availability to cities. 

Uber is increasingly expanding beyond ride-hailing in a bid to create new revenue streams. The company has a large food delivery operation, provides parcel delivery services in some areas and recently even entered the public transit software business. 

Photo: Uber