The agreement reached by the two parties gives drivers more insight into why drivers are at times barred from the service via the company’s driver’s rating system and also allows the contractors to establish driver assciations in California and MA.
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Uber will still be able to set fares and subtract commissions of approximately 20 percent, and drivers will remain responsible for supplying the vehicle and paying all expenses, including insurance, the Los Angeles Times (sub. req.) reports.
Drivers might be pleased with the extra income, and riders may be annoyed by the additional charge, but Uber could be the biggest victor of all in the settlement.
In a blost post titled “Growing and growing up”, CEO Travis Kalanick announced the settlement and admitted the company hasn’t “always done a good job working with drivers”.
Both suits had the potential to shatter Uber’s business model because recognizing drivers as employees would have substantially increased the company’s costs.
There are already similar groups that drivers have formed across the US without Uber’s involvement, like the App-Based Driver’s Association in Seattle, which is affiliated with a local union organization.
The case had posed a huge threat to Uber’s business model.
The settlement reflects a definite challenge to Uber’s unilateral power over drivers, but it also underscores the difficulty of initiating even promising legal maneuvers against massive companies. We faced the risk that a jury in San Francisco (where Uber is everywhere and quite popular) may not side with the drivers over Uber…
“We realise that some will be disappointed not to see this case go to trial”, said Shannon Liss-Riordan, an attorney for drivers.
As the settlement – which must still be approved by a judge – will keep the drivers classified as independent contractors, Uber won’t be required to pay them minimum wage or provide certain worker benefits such as overtime and healthcare. The deal includes drivers in California and MA who had claimed they were misclassified as independent contractors. “By coming together, the Teamsters will help these drivers have a stronger voice and improve standards for rideshare drivers in California”.
The settlement now awaits the approval by US District Judge Edward Chen in San Francisco.
Uber also agreed to other labor concessions, like allowing drivers to put up signs asking for tips, which cannot now be solicited through the Uber app. Drivers will also receive more information about how Uber decides to ban drivers, the Times reported.
“Importantly, the case is being settled – not decided”, she said.
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While this is technically a win for the Uber drivers that brought these suits, it’s also a major victory for Uber, whose treatment of drivers as independent drivers was increasingly called into question by worker advocates and regulators.
