Uber’s flotation: from law suits to the stock market

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By Polly Botsford on

Treacherous legal waters for the tech titan

The world’s favourite taxi App, Uber, lists on the New York stock exchange today anticipating raising over $90 billion (£69 billion) in the process.

But the San Francisco-based tech disruptor arrives at this point with a string of legal cases against it — and with many battles yet to be won or lost. From class action claims in a number of states in the US to rulings in the European courts, Uber’s list of legal claims is long and getting longer.

Perhaps the most important — and the one as yet unresolved — relates to the status of its drivers: in a number of jurisdictions including the UK, courts are grappling with whether or not Uber drivers should be classed as employees or self-employed.

In the UK in December of last year, Uber lost its appeal against an Employment Tribunal decision that found its UK drivers qualify as workers not as self-employed and are thereby entitled to, among other things, the minimum wage and holiday pay. Uber has indicated it will appeal the issue to the Supreme Court.

In the US, Uber settled claims against drivers in California and Massachusetts (to the tune of $20 million (£15 million) on similar issues agreeing to certain driver protections without reclassifying its drivers as employees.

For Uber, the problem with the driver-status cases is that its business model is in part reliant on them not being fully-fledged employees and thus not embroiling the gig-economy-modelled operation in employment-related regulations and obligations.

Indeed, Uber cites this issue in its pre-listing disclosure documents. It writes: “Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.”

Beyond the driver-status cases lie other treacherous legal waters: there are legal claims relating also to alleged trade secrets breaches (brought by Waymo), data breaches, sexual harassment claims, and various US government-agency investigations. One of the more recent cases decided in March of this year was a bit of good news. It concerns one of Uber’s self-driving cars that involved the death of an individual: prosecutors in Arizona did not hold Uber criminally liable for the crash.

Perhaps all this litigation is just par for the course for a modern business. More likely it is only to be expected if you disrupt the market in the way that Uber has. The word ‘uber’ is used in German to mean ‘above’: Uber’s success is that it is operating ‘above’ the rules that everyone had, until it came along, got used to.

Only yesterday, disgruntled drivers organised a strike against Uber to coincide with the company’s New York listing, highlighting the stark contrast between what protestors say Uber executives will gain by the listing ($$$$$$$ basically — with Uber’s founder set to benefit by around $7 billion (£5 billion)) compared with a typical driver’s take home pay of £11 per hour.

Uber’s chief legal officer, Tony West, formerly an assistant attorney general under the Obama administration who also spent time at another US giant, Pepsico, certainly has his work cut out for him.

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