Judge rejects $100-million Uber settlement

SAN FRANCISCO — A federal judge rejected Uber’s proposed $100-million bid to settle a class-action lawsuit involving the employment status of drivers, describing the sum as “not fair, adequate, and reasonable.”

The San Francisco ride-hailing company had offered to pay drivers $84 million and an additional $16 million if the firm goes public rather than classify them as employees — a shift that would make them eligible for benefits such as expense reimbursement and overtime.

In a court order issued Thursday, U.S. District Judge Edward Chen of the Northern District of California said this would amount to only 10% of what the plaintiffs’ attorneys estimated to be the full value of drivers’ claims.

A chart included in the order showed that drivers can potentially lay claim to $700 million in mileage reimbursement, $122 million in tips, $2.4 million in overtime, and $30 million in phone reimbursements.

“The settlement, mutually agreed by both sides, was fair and reasonable,” Uber spokesman Matt Kallman said in a prepared statement.

The plaintiffs’ attorney did not immediately respond to requests for comment.

Both sides could return to the drawing board and arrive at a new proposed settlement, which is what Uber rival Lyft did after a judge rejected its proposed $12.5-million settlement in a similar suit. Its proposed settlement of $27 million was approved in June.

But legal experts who are not involved in the case said the judge’s order could make a settlement unlikely.

If Uber and the drivers cannot agree on a new sum, the case could proceed to trial. If plaintiffs win at trial, it could be a huge blow to the ride-hailing company, which may be forced to stop treating drivers as independent contractors and face a statutory penalty exceeding $1 billion. If Uber wins, the plaintiffs could get nothing.

Or, if the U.S. 9th Circuit Court of Appeals overturns Judge Chen’s certification of the class — a decision expected soon — then the vast majority of the class would have to go to individual arbitration.