Uber has agreed to pay up to $100m (£70m) to settle lawsuits by USA drivers over whether they should be classified as independent contractors or employees.
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The ride-hailing company said it would shell out an additional $16 million to those drivers if the company’s valuation hits 1.5 times its current value, which now stands at $62.5 billion, after it goes public, or if it gets bought.
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.
The core issue in these two suits (the issue is still pending in Florida, Arizona, Pennsylvania, and other states) is whether the company or the drivers control the drivers.
If approved, the payment will be distributed among drivers in California and MA who performed at least one trip up until the date of the preliminary settlement approval. The company must also provide drivers with performance data about their peers and help create an association in California and MA to act as a grievance board, according to the Los Angeles Times.
The most significant aspect of the agreement for Uber is that the company will be able to continue classifying its drivers as independent contractors. The settlement covers drivers in both California and MA, where Liss-Riordan’s practice is based.
Uber has agreed to settle a pair of lawsuits that could have significantly upended the company’s existing business model. The company has reached a settlement in a pair of class-action lawsuits in California and MA.
Some 450,000 drivers use the Uber app each month in the U.S., according to Uber.
Over 450,000 American drivers now use the app each month, Mr Kalanick said in the blog post.
Following an ongoing case since 2015, taxi competition firm Uber has agreed to settle for as much as $100 million. “It’s time to change”.
Drivers had argued that they should be classed as employees, entitling them to claim expenses and other rights.
Uber will also post a driver deactivation policy and no longer deactivate drivers who regularly decline trips when logged into the Uber app, according to Liss-Riordan.
Nothing about the settlement prevents a future court case, or United States authorities, from deciding that Uber drivers are in fact employees, she added. A $12.5 million settlement with San Francisco drivers for ride-hailing company Lyft, also reached by Liss-Riordan, was rejected by a federal judge for having “short-changed drivers”.
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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.
