Uber agreed on Thursday to settle two class action lawsuits and will pay as much as $100 million to 385,000 drivers who sued the ride-hailing giant over how they should be classified — as employees, not independent contractors.
Though drivers in California and Massachusetts will get paid — some will only receive around $200 — the settlement is actually a win for Uber, given that drivers will still remain as independent contractors and not employees, which require the company to provide costly worker protections.
“Drivers value their independence — the freedom to push a button rather than punch a clock, to use Uber and Lyft simultaneously, to drive most of the week or for just a few hours,” Uber CEO Travis Kalanick wrote in this blog post.
As a result of the settlement, Uber will roll out a number of new policies for drivers.
“For example, we don’t have a policy explaining when and how we bar drivers from using the app, or a process to appeal these decisions,” Kalanick wrote. “At our size that’s not good enough. It’s time to change.”
Uber, via a driver deactivation policy released for the first time, will be more transparent with how a driver rating is calculated and reasons for deactivating a driver. In California and Massachusetts, it will also help create and fund “a driver’s association” to help “discuss the issues that matter most to drivers.”
There are already similar groups that drivers have formed across the U.S. without Uber’s involvement, like the App-Based Driver’s Association in Seattle, which is affiliated with a local union organization.
Uber, which is valued at more than $60 billion and has more than 450,000 drivers in the U.S, will also let drivers in those two states solicit tips — something that Uber rival Lyft already includes as part of its app experience.
Other changes include an appeals process for drivers in California and Massachusetts who disagree with how they’ve been deactivated. Uber will also not deactivate drivers for “regularly” declining ride requests.
The lawsuit still needs to be approved by a U.S. District Court judge, The Verge noted.
Uber has long dealt with lawsuits and pressure from workers rights advocates over the past few years who contend that drivers should be classified as employees, not contractors. This case will likely set precedent for other pending and new lawsuits going forward. Uber is also facing approved legislation in Seattle that creates a way for Uber, Lyft, and taxi drivers to unionize and gain benefits typically given to employees, as a way to combat income inequality. Uber has long opposed the legislation, and the U.S. Chamber of Commerce last month sued the City of Seattle, challenging a law it says “will burden innovation, increase prices, and reduce quality and services for consumers.”
