Uber Reaches $100 Million Class Action Settlement Allowing Drivers to Remain as Independent Contractors

In California, ride share services such as Uber and Lyft have been in an ongoing debate on whether or not its drivers should be classified as employees or independent contractors. Last Thursday, the Uber finally reached a settlement in dual class-action lawsuits in both California and Massachusetts. The settlement will allow Uber to continue classifying drivers as independent contractors. Though classifying workers as independent contractors gives drivers flexibility, it also prevents them from receiving worker protections.

This settlement will likely have a long term affect on the ride hailing service in addition to other companies that use this method of categorizing employees.

Here are the details of the settlement:

1. Uber will have to shell out $100 million to the 385,000 drivers. While some drivers will receive $8,000, the majority will get $24 or less (don’t spend it all in one place!)
2. Uber will now have to provide feedback to drivers who are banned from driving for the app. Before, the company could ban employees from the app with no explanation.
3. The conditions of the settlement are only binding in California and Massachusetts (although this might prompt other states/countries to evaluate their regulations). Uber faces similar litigation in the states of Florida, Arizona, and Pennsylvania.
4. Uber has to give drivers more information about the rating system that is used to evaluate their performance. They will allow drivers to go through an appeals process if their status as a driver becomes deactivated due to a low rating.
5. Uber will now provide a document that tells drivers all the ways that their status as a driver might become deactivated (i.e. using drugs, alcohol, carrying a firearm, driving erratically.)
6. Uber can no longer deactivate drivers who regularly turn down requests for rides. Instead, drivers can now simply log out of the app.
7. Drivers who regularly accept trips and then decline will be penalized and eventually deactivated if the behavior continues.

Lyft’s class action settlement in California was rejected by the judge just recently as unfair. Do you think this settlement will stand in court?