The settlement awaits approval, but it may not be an end to litigation
April 22, 2016
Uber and its drivers have been at odds for a few years now. The company has asserted that its drivers are private contractors – not employees; however, drivers have felt that they should have certain expenses covered by Uber, such as vehicle maintenance and gas. These mixed feelings resulted in two lawsuits in California and Massachusetts.
But, as of April 21, Uber has agreed to settle both lawsuits to the tune of up to $100 million, according to a Los Angeles Times report. 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.
Settlement details
If approved, the settlement would initially distribute $84 million to Uber drivers in California and Massachusetts. Drivers would be eligible for a cut of that money if they made at least one trip before the preliminary settlement approval.
An additional $16 million would be distributed at a later date if Uber’s value increased by 1.5 times its current level when the company goes public or is acquired. Drivers would be paid according to the number of miles they have driven with a passenger in the car; those who logged 25,000 miles or more could see payments upwards of $8,000.
In terms of policy, Uber has also agreed to create a system where drivers cannot be automatically deactivated by the company. Instead, a system of warnings would be created that would allow drivers to correct their behavior before further action is taken. A panel would also be created by Uber so that drivers can appeal decisions if they feel that they were treated unfairly.
Perhaps the most important amendment of the settlement for passengers is a clarification that will be made about tips. The company would make it clear that tips are not included in the fare that passengers are charged. Consequently, drivers would be allowed to solicit for tips in the future.
Uber comes out on top?
Although many may feel that Uber drivers come out on top in this settlement, some experts are not so quick to agree. They state that the settlement actually deals with one of the big problems that Uber has faced since it started.
By keeping drivers classified as private contractors, the company avoids having to pay driver expenses, like gas and mileage. They also don’t have to provide health insurance, Social Security, overtime, or sick days – facets that would have cut into their profit margins.
However, there are some hurdles that the company must overcome going forward. Firstly, the settlement needs to be approved by the courts in order to make it official. But, even assuming that it is, that does not mean that the legal battle is over.
Plaintiff attorney Shannon Liss-Riordan has stated firmly that this settlement has not definitively decided whether Uber drivers are employees or private contractors. This opens up the possibility for future litigation.
“If we chose not to settle this case, we faced risks. . . 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. . . The debate will not end here,” she said.