A settlement is pending in the highly publicized Uber class-action lawsuit over whether the ride-sharing company has wrongly classified employees as independent contractors to avoid costs. The settlement is awaiting approval by a San Francisco federal judge and faces opposition from drivers and other parties who would be indirectly affected by the settlement.
Under the terms of the provisional settlement, Uber drivers would be awarded a $100 million payout. This number could be anywhere from $12 or upwards of several thousand dollars depending on how many miles driven for the company.
In addition, the deal contains a number of non-monetary provisions, such as an agreement to change the policy regarding driver termination, provision of an appeals process for terminated drivers, and an agreement that the company will notify drivers that they do not automatically receive tips from fares. Under the terms of the settlement, drivers will also be permitted to solicit tips. Also, the company has agreed to help the drivers form a union-like association. The settlement has many contingencies, for example, $16 million of the payout is dependent on the company’s future valuation increasing by 150 percent.
But the specific provision that has many concerned is a “sunset clause,” which would allow the non-monetary provisions of the deal to expire in two years unless Uber elects to keep them in place longer. This clause would allow Uber to simply back out of the deal if the proposed changes prove too costly or unwieldy for the company.
Uber drivers have also expressed concern that the settlement does not resolve the issue of whether the law requires that drivers be classified as employees. A settlement would give them little certainty about what the market for on-demand driving will offer in the future.
Another concern has been raised in a related class-action case against Uber where drivers have challenged the company’s use of credit reports during driver background checks. If accepted, the settlement would prohibit drivers from being able to continue participating in their case depending on their credit.
Uber has requested to omit details from the settlement that would allow drivers to evaluate the deal and give informed consent to the settlement, citing trade secrets that would damage the company if made public. In a similar lawsuit filed against Lyft, Uber’s chief competitor, a Federal District Court judge denied the company’s request to keep similar information secret. It is unclear if Uber’s request will result in the same outcome.
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