Uber has agreed to settle a class-action lawsuit with its California and Massachusetts drivers for up to $100m, avoiding a jury trial that could have reclassified contractors as employees and was expected to determine the fate of the so-called gig economy.
The proposed settlement – which must be approved by a judge – would allow the ride-hail app to continue classifying drivers as independent contractors though it will make some changes to their working conditions.
Under the terms of the settlement, Uber has agreed to stop deactivating drivers “at will” and will allow drivers to solicit tips by placing a sign in their cars. The ride-hailing company will also facilitate the formation of a “drivers’ association” that “can play a role similar to a union”, according to a statement from the drivers’ attorney, Shannon Liss-Riordan.
Of the settlement money, $84m is guaranteed to drivers and $16m is contingent on an increase in Uber’s value, according to a statement from lawyers representing the drivers.
Though she acknowledged that “some will be disappointed not to see this case go to trial”, Liss-Riordan said that the size of the settlement will serve as a “stern warning to companies who play fast and loose with classifying their workforce as independent contractors”.
Approval of a proposed class-action settlement is not guaranteed. In January, Liss-Riordan reached a proposed $12.25m settlement on a similar claim against rival ride-hail company Lyft. That settlement was rejected in April by a federal judge who said the agreement “shortchanged” drivers.
Uber did not immediately respond to a request for comment.
More to come.