In some good news for Uber, it can finally lay to rest two class action lawsuits that were brought against it in the US, during the course of the last two years.
With one class action lawsuit being lodged in Massachusetts in late 2014 and another in California in September 2015, the company has decided to settle outside of court pending approval by a judge. The company, with an estimated valuation of $70 billion, has put itself on the hook to pay up to $100 million to its 385,000 drivers. This amount is comprised of an $84 million dollar upfront payment followed by an additional $16 million should Uber go public in the future.
Uber has also agreed to provide a means for the company to better communicate ranking information and peer comparison to its drivers in addition to implementing a formal driver deactivation policy which will apply across the US. Driver associations will also be setup and funded by Uber in both states to allow quarterly meetings with driver representatives to discuss pressing matters.
Perhaps, most critically, Uber is still permitted to classify its drivers as independent contractors rather than direct employees. This will allow the company to continue recruiting new drivers cheaply without standard benefits such as health insurance and overtime.
According to a statement published by Uber, an employee stated:
"I’ve been an employee and an employer, and I’ve also been an independent contractor. I know the difference between these things. With Uber, I’m an independent contractor. And I wouldn’t have it any other way.”
Shannon Liss-Riordan, an attorney representing drivers in both lawsuits, conceded that not all drivers would be happy with the settlement but remained upbeat about the forthcoming benefits. However, she also noted, "No court has decided here whether Uber drivers are employees or independent contractors and that debate will not end here."
As such, it could well remain a question of not if but when Uber could be dragged back to court over that particular matter.