More than 60,000 Uber drivers claiming misclassification as independent contractors have filed arbitration demands, or expressed that they intend to do so, Uber Technologies said in the prospectus for its initial public offering filed last week.
Each demand could include filing fees of up to $1,500 for the company, the prospectus noted.
Uber already agreed in March to pay $20 million to settle misclassification claims in class action lawsuits by California and Massachusetts drivers who had not signed agreements calling for arbitration instead of court trials. That settlement is subject to final approval during a hearing in July; those cases include O’Connor et al v. Uber Technologies Inc. and Yucesoy V. Uber Technologies Inc. et al. The proposed settlement does not require the company to classify the California or Massachusetts drivers as employees.
The company noted it believes the drivers are properly classified as independent contractors, but it faces a number of challenges in addition to the two lawsuits.
“The independent contractor status of drivers is currently being challenged in courts and by government agencies in the United States and abroad,” according to the prospectus.
Costs associated with fighting the misclassification challenges could be material to its business, the company noted among risk factors listed in the document.
New laws could also be a challenge, such as the Dynamex decision in California, which adopted a new standard in determining worker classification. The company also cited a ruling in the UK where an Employment Appeal Tribunal found that drivers were workers rather than self-employed.
The prospectus further noted the company received a “notification of assessment” from the California Employment Development Department that imposed payroll tax liabilities on the company. Uber said it is appealing the assessment, which it had received in December 2016 following an audit begun in 2014.
In Switzerland, the company reported that several government agencies currently classify drivers as employees of Uber Switzerland for social security purposes, and the company is challenging the classifications.
Reclassifying drivers would add “significant additional expenses” and could require the company to fundamentally change its business model, according to wording in the prospectus.
