Settlement reached in Uber independent contractor suits

Two potentially ground-breaking class action lawsuits that could have radically altered the relationship between Uber and its drivers ended on April 21 with a soft whimper instead of a loud bang when attorneys for the plaintiffs and Uber announced that they had reached a settlement.

Plaintiffs in the two suits, one in California, the other in Massachusetts,  argued that they are employees entitled to all rights and protections afforded to employees by US labor law ( social security, unemployment insurance, workers compensation, overtime pay, etc.) and not as Uber prefers to call them independent contractors.

The settlement does not definitively resolve the question of whether Uber drivers are employees or contractors.

But the plaintiffs’ attorney Shannon Liss-Riordan said that there will be other opportunities to win labor rights for Uber drivers.

“The case (has been) settled–not decided,” said Liss-Riordan. “No court has decided whether Uber drivers are employees or independent contractors and that debate will not end here.”

One of the two suits would have been heard in San Francisco, Uber’s home base, and Liss-Riordan said that it was too risky to let a jury in San Francisco determine the employment status of the company’s drivers.

As part of the settlement, Uber agreed to pay up to $100 million.. The bulk of that money will go to compensate eligible drivers.

Those eligible include drivers in California and Massachusetts who opted out of the clause in their contract that forbids them from joining class action suits.

Liss-Riordan estimates that about 385,000 drivers will be eligible for compensation but not all will file claims.

The amount of money eligible drivers receive depends on the number of miles that they have driven for Uber and where they work. Those who have driven more than 25,000 miles in California could receive as much as $8000.

That amount is based on an estimate that only 50 percent of those eligible will file claims.

If 100 percent of the eligible drivers in California file claims, the amount that each driver receives would be $1950. In Massachusetts, the average amount received if 100 percent of eligible drivers file claims would be $979.

The average payout for drivers who drove less than 25,000 miles is between $24 and $1137.

The settlement still allows Uber to set fees and to determine how much of the fare it keeps. Currently, Uber keeps an upfront booking fee and then 20 percent of the remaining fare.

As a result of the settlement, drivers will now be able to post information in their vehicle explaining that tips are not included in the fare and that tips would be appreciated.

The agreement also  makes it somewhat more difficult for Uber to fire (or deactivate as Uber calls it) drivers working in California or Massachusetts.

Uber must now show sufficient cause for firing a driver and provide a warning that gives the driver an opportunity to correct problems identified by the company.

It establishes a panel composed of highly rated drivers who will hear appeals by drivers contesting their firing. Drivers not satisfied with the panel’s decision may appeal to an arbitrator paid by Uber.

Uber will no longer be able to fire drivers for low acceptance rates. In the past, if drivers accepted less than 80 percent of ride requests, they received emails from Uber threatening them with dismissal.

The settlement also requires Uber to meet quarterly with representatives of a drivers association.

The drivers association and Uber will discuss issues of concern among drivers.

The Teamsters in California have already stated that they will try to help Uber drivers form their association.

“After receiving overwhelming outreach from Uber drivers, representatives of Teamsters Joint Council 7 have announced plans to form an association for workers in California’s rideshare industry,” reads a statement issued by the Teamsters after the

“We welcome any Uber drivers seeking to improve their working conditions,” said Rome Aloise, Teamsters International Vice President and President of Teamsters Joint Council 7. “By coming together, the Teamsters will help these drivers have a stronger voice and improve standards for rideshare drivers in California.”

The Teamsters have already helped organize an association of Uber drivers in Seattle.

Despite the concessions that Uber made in the settlement, Uber seems quite happy with the outcome.

In a public statement, Uber said that it “was pleased (with) this settlement” because it leaves intact for now the drivers’ status as independent contractors.

Michael Hiltzik, writing for the Los Angeles Times, observes that Uber has other reasons to be happy.

“Had litigation continued, it might have put the company’s entire business model on trial, exposing the degree to which the economic benefits of the so-called ‘gig economy’ flow heavily, even exclusively toward investors and executives at the expense of those providing the core services.”

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