Drivers’ lawsuit a risk to Uber’s plans to go public

PHILADELPHIA — A lawsuit filed by three Philadelphia drivers could pose a threat to Uber, the tech giant reported in documents prepared in advance of it becoming a publicly traded company.

The suit from drivers for Uber’s black car service in 2016 challenges one of the foundational principles of the ride-share business model — that drivers are independent contractors, not employees.

“Judges haven’t decided the status of our employment, and if we end up expanding our class of UberBlack drivers, that will change the whole Uber model and it will flip the IPO upside down,” said Ali Razak, one of the Philadelphia drivers suing Uber.

Uber Technologies Inc. named the suit by Philadelphia UberBlack drivers Razak, Kenan Sabani and Khaldoun Cherdoud as one of the legal actions now pending that posed a risk to the company in documents filed Thursday for a registration statement with the U.S. Securities and Exchange Commission.

The documents describe Uber’s financial position, its strategy for growth, and risks to the company as a prelude to an initial public offering.

Classifying drivers as employees, the company stated, would “require us to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition.”

The suit filed in the Eastern District of Pennsylvania has been unsuccessful so far.

In April 2018 a judge issued a summary judgment in favour of Uber, saying Razak had not proved Uber drivers are employees, but the decision is under appeal.

Uber earned $11.3 million US in revenue last year, according to the SEC documents, but also reported a $1.8-billion net loss.