Uber Drivers to Remain Independent Contractors
Company to pay $100 million as it settles lawsuit in California and Massachusetts
San Francisco: Uber has agreed to pay up to $100 million to settle a class-action lawsuit which resolves a major challenge to its business model by allowing the ride-hailing service to keep its California and Massachusetts drivers as independent contractors. The lawsuit had claimed that Uber drivers are employees and thus entitled to reimbursement of expenses. The case against Uber had been closely watched in Silicon Valley, as other companies in the on-demand tech economy share Uber’s reliance on independent contractors. The class action had been scheduled for a trial in San Francisco federal court in June. “We realise that some will be disappointed not to see this case go to trial,” said Shannon Liss-Riordan, an attorney for drivers. However, Liss-Riordan said the plaintiff drivers faced significant risks of losing if the case moved forward, particularly because a federal appeals court had recently agreed to review an order allowing Uber drivers to sue as a group. Nothing about the settlement prevents a future court, or US labour authorities, from deeming Uber drivers as employees, she said in a statement.
Out of the $100 -million proposed payment, $ 84 million is guaranteed to drivers. Uber could also pay an additional $16 million, but only if the company’s valuation grows by 150% above its December 2015 financing round within a year after any initial public offering.