With this settlement, company will manage to retain its California and Massachusetts’ drivers as independent contractor. Uber, which is valued at $62.5 billion, said it will pay the drivers an additional $16 million if the company’s valuation reaches 1.5 times its current value after it goes public or if it gets bought.
Advertisement
Drivers from California and MA had claimed they were in fact employees and therefore entitled to reimbursement of expenses. It was supposed to go into trial as class action in a federal court in San Francisco in June.
The company will also make it easier for its drivers to find and compare ratings, introduce clear policies about how their accounts are deactivated (in those two states only) and help them create a driver’s association.
It’s going to be cheaper to pay $100 million in the settlement now than to classify the drivers as employees.
Two different class-action lawsuits brought against Uber have been settled, and the result is that soon your Uber driver will be expecting a cash tip.
“That said, as Uber has grown – over 450,000 drivers use the app each month here in the USA – we haven’t always done a good job working with drivers”, he wrote.
U.S. District Court Judge Edward Chen must still sign off on the deal.
Despite the payout, the settlement will allow Uber to continue operating without fundamentally changing its relationship to its drivers. Drivers claimed Uber told passengers that tips were included in the fare, but the company did not actually give tips to the drivers. The lawsuits hinged on whether drivers were misclassified as independent contractors, instead of employees. However, Uber has to change some practices like how they terminate drivers. Such include the institution of a policy for deactivation of drivers as per Chief Executive Travis Kalanick.
As per Lions Ground News, the case appointed against Uber is being monitored closely in Silicon Valley.
However, avoiding a potentially adverse finding that drivers are employees is a win for Uber, said attorney James Evans, who represents companies in employment litigation.
The Uber settlement pushes drivers in the involved states to remain independent contractors and not employees, a decision that the company will prove beneficial to Uber drivers.
Following an ongoing case since 2015, taxi competition firm Uber has agreed to settle for as much as $100 million.
While the association will not be an official union, Liss-Riordan says that it can “play a role similar to a union”. While Uber also has lawsuits pending in Arizona, Florida, and Pennsylvania, the cases in California and MA involve the largest amount of drivers.
Advertisement
The case had posed a huge threat to Uber’s business model.
