Uber Settles for $100 Million

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Uber taxi ad, by flickr user Alper Cugun, licensed by Creative Commons.Uber, the tap a button, get a ride app that has changed the transportation industry across borders, cultures and languages alike, will pay up to $100 million to the 385,000 drivers in California and Massachusetts over whether they are considered independent contractors or employees. Uber has agreed to pay the plaintiffs $84 million, with a second payment of $16 million if it fact goes public. Judge Edward Chen, is presiding over the case in the Northern California Superior Court, he must still approve the settlement in order for it to take effect.

Shannon Liss-Riordan, is representing the drivers in the suits and stated “No court has decided here whether Uber drivers are employees or independent contractors and that debate will not end here.” The case “stands as a stern warning to companies who play fast and loose with classifying their workforce as independent contractors, who do not receive the benefits of the wage laws and other employee protections.”

The payout to drivers will be based on the number of miles they drove for Uber, CEO Travis Kalanick insists that many of their drivers want to be their own boss and value their independence so he is very pleased that this settlement recognizes that they will remain as independent contractors, not employees.

“In the U.S. almost 90% [of drivers] say they choose Uber because they want to be their own boss. 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’s statement said.

“The gig economy wasn’t perhaps explained to them, so they thought they were getting one thing and they go something a little different,” said Thomas Baylis, a partner with the firm of Cullen and Dykman in New York City who specializes in labor law.

The class action settlement only applies to the people who signed on to drive for Uber early on with the notion that they may not have understood the company was not offering to actually hire them. Going forward, Uber has made it very clear to any new potential drivers that they are not, and will never be employees, so they will not be eligible to file suit.