Ride-sharing Uber and its drivers have reached a tentative settlement of $100 million, giving drivers greater bargaining power, but allowing the company to retain them as freelancers, rather than employees.
The proposed settlement guarantees $84 million in payment to drivers with the remaining $16 million contingent on future increases in Uber’s company valuation. The deal still must be approved by the trial judge.
The 160,000 California drivers filed class actions three years ago claiming they were employees entitled to a variety of workers’ rights and not independent contractors as the company claimed. In addition, the drivers alleged that Uber wrongly told its customers that tips were included in the fares.
Under terms of the deal Uber agreed to change its business practices to give drivers greater transparency and a way to seek redress for complaints.
Uber agreed it will only be able to deactivate drivers from the Uber platform for sufficient cause and give drivers two warnings and create an appeals process overseen by fellow drivers.
Uber would allow drivers to arbitrate claims at Uber’s expense, including claims related to the driver’s employment status. The company also said it will fund a Driver Association of elected driver leaders and meet with them quarterly to address concerns.
Finally, Uber will clarify its messages to customers that tipping, while not required, is not part of the fare.
In December, U.S. District Judge Edward Chen approved class status for the drivers over employment status and a subclass of drivers seeking tips. The drivers wanted reimbursement for phone and vehicle-related costs as well as overtime pay, lunch breaks and expense payments.
Uber created a software program, or Uber app, that allows people seeking taxi service to link up with drivers, who use the same app. The drivers use their personal cars to meet riders and drive them to their destination for a fee. The fees go directly to Uber via credit card payments and drivers receive a share of the fee.
Case: O’Connor v. Uber, No. 13-3826