As the company races towards an initial public offering this year, a number of outstanding lawsuits by drivers unhappy with their status as independent contractors could weigh on the IPO.
A judge in Ontario's highest court said in a ruling on Wednesday that Uber has used its (technically) optional arbitration clause, one that forbids drivers from bringing court actions against the company, to "take advantage of its drivers, who are clearly vulnerable to the market strength of Uber."
The ruling allows the suit, lead by driver David Heller, to proceed in its attempts to certify the group of drivers as a cohesive group and attain the class status of a class action lawsuit.
Under Uber Canada's terms and conditions, drivers who want to pursue arbitration for any disputes against the company have to do so overseas, in the Netherlands, and pay $14,500 up front to begin the proceedings. Those requirements are "unconscionable" and "invalid" the court said.
Michael Wright, the lawyer for the plaintiffs in the case, said he's never seen anything like Uber's arbitration requirements in his career.
"This doesn't make it difficult for people to pursue arbitration," he said in an interview. "It makes it impossible."
Uber is reviewing the court's decision, it said. "We are proud to offer a flexible earning opportunity to tens of thousands of drivers throughout Ontario," spokesperson Josh McConnell said in an email.
Canada has been a tricky market for Uber, but is also the hearth of one some of its newest- and fastest-growing businesses. In Montreal, where it faced stiff backlash from taxi drivers and operated illegally for some time, its offices were raided by investigators in 2015 after years of tension. But in the largest city of Toronto, it's quickly staffing up an office to handle things like grocery delivery and more Uber Eats expansion.
Arbitration has been a headache for Uber outside of Canada, too. While its policies for arbitration differ in the US, most notably in that the company must pay an arbiters fee to begin proceedings, drivers there are also prohibited from taking legal action against the company through the courts.
Last month, a group of more than 12,000 drivers filed a lawsuit against the company, saying it has refused to begin their arbitration processes. Even if it were to begin paying the fees on their disputes, working through all of the claims could take up to a decade.
And in Britain, a court in December sided with U.K. drivers in a decision that could give them a type of employment status, and thus be entitled to some benefits like paid vacations or a minimum wage.
"I think the message here is for companies," Lior Samfiru, another of the plaintiff's lawyers, told Canada's Financial Post. "If you're going to operate in Ontario, if you're going to operate in Canada, you have to abide by our laws … You have to play by the same rules as everyone else."