Thu, Mar 14, 2019 - Page 10 News List

Uber to pay US$20m to settle classification suits

‘ANTICLIMACTIC’:The main lawsuit at one point grew to include 385,000 Uber drivers, posing a threat to the firm, before an appeals court removed the suit’s class-action status


Uber Technologies Inc is to pay US$20 million to settle California lawsuits challenging the company’s classification of drivers as independent contractors, and not employees owed the benefits of traditional employment.

Resolution of the long-standing fight over benefits and pay came as Uber is preparing for its initial public offering later this year.

The drivers attacked the ride-sharing company’s business model of treating them as contractors to avoid the costs of paying a minimum wage, overtime, sick leave and health insurance.

The cases turned on whether drivers were essentially forced by their contracts to resolve any conflicts one-on-one, behind the closed doors of private arbitration and forbidden to join forces in class-action lawsuits.

Drivers said that Uber made it onerous for them to opt out of the arbitration provisions.

“This feels like an anticlimactic ending, but ultimately a reasonable one,” said Charlotte Garden, a law professor at Seattle University. “The proposed settlement involves only drivers who aren’t covered by arbitration clauses,” but gets them more money than the previous proposed settlement would have, she said. “Finally, this doesn’t resolve the status of drivers.”

Uber said it has worked to make “the driver experience even better through improvements like in-app tipping, a redesigned driver app and new rewards programs,” according to an e-mailed statement from spokesman Matt Kallman. “We’ll continue working hard to improve the quality, security and dignity of independent work.”

The central lawsuit initially posed a threat to Uber as it grew to represent as many as 385,000 drivers in California and Massachusetts after a San Francisco judge granted class-action status.

That momentum was undone by an appeals court ruling upholding Uber’s arbitration agreements as largely valid and enforceable, which ultimately reduced the class to about 13,600 drivers who are to partake in the settlement.

The settlement, which requires a judge’s approval, was filed late on Monday in San Francisco federal court and confirmed by Shannon Liss-Riordan, who represents drivers in the San Francisco lawsuits and settled with the ride-share company.

“Uber has an arbitration clause, which it very rigorously enforces,” Liss-Riordan said. “It’s a myth that these opt-out provisions in arbitration clauses really make these agreements voluntary.”

“This is not the end of the issue of driver classification,” Liss-Riordan said in an e-mailed statement on Tuesday. “We are continuing to pursue many cases against gig economy companies [and others] that are mis-classifying their workers as independent contractors in order to save on labor costs and shift the risks and expenses of operating a business to their low-wage workers.”

Even before the appeals court ruling, prospects for the suits against Uber were dealt a blow by a US Supreme Court decision last year that bolstered the power of employers to force workers to use individual arbitration instead of class-action complaints.

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