Under the settlement, Uber will pay drivers $84 million, with an additional $16 million if the company goes public and its “valuation increases one and a half times from our December 2015 financing valuation within the first year of an IPO”.
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Under terms of the deal announced Thursday evening, Uber would not have to reclassify its independent contractor drivers or offer them employee benefits such as minimum wage, overtime and reimbursement for driving expenses. 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”.
In two lawsuits settled last night, drivers in MA and California had challenged the company’s approach to its labor.
No one knows this better than Uber, which has been facing an onslaught of lawsuits from drivers seeking employee status.
So the next time you get an Uber, if you don’t tip, the driver can give you a poor rating, which might affect your ability to catch a ride in the future.
Kalanick did concede that Uber may have something to learn from the massive driver lawsuit, which brings payouts to more than 385,000 drivers.
The case covered about 350,000 drivers.
Finally, Uber will make it clear to riders that tips are not included in Uber’s fares.
Lyft drivers already have the gratuity expectation, so that option has always been on their app. Uber’s statement on the FAQ page regarding payment options is no longer valid, but as of today, it remains on their site. Under the agreement, which still awaits approval from the U.S. District Court of Northern California, drivers would remain private contractors, but Uber would change some of its business practices and alter policies that affect driver deactivation. Distribution will be based on miles driven while a passenger was in the vehicle. “In the meantime, we will continue to work in good faith with the Commission”. Drivers wishing to fight their removal could bring their concerns to an appeals panel made up of other Uber drivers.
In addition, she says, Uber and the drivers will have a formal grievance procedure. “That’s why we are so pleased that this settlement recognizes that drivers should remain as independent contractors, not employees”, the statement reads.
“Under this agreement, Uber has agreed to pay up to $100 million to resolve these claims and will implement a number of significant policy changes”. The case had been scheduled for a trial in San Francisco federal court in June. Both sides have gone back to the drawing board. Uber’s willingness to pay such a large sum to settle this case indicates how badly it wants to prevent drivers from being reclassified, which it argues would be fatal to its business model.
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“As we’ve grown we’ve gotten a lot right, but certainly not everything”, Kalanick wrote.
