Employee or Independent Contractor?

Uber settles with drivers for $20 million

Smiling Uber driver with two passengers

From JDSupra, Richard Reibstein reports on a settlement for $20 million between Uber and drivers in California and Massachusetts. Richard writes:

$20 MILLION SETTLEMENT WITH UBER IS APPROVED BY COURT IN INDEPENDENT CONTRACTOR MISCLASSIFICATION CASE.  A California federal district court has granted approval of a $20 million settlement reached between Uber and 13,600 California and Massachusetts drivers, who alleged they should have been classified as employees and not independent contractors. As discussed in our blog posts of April 22, 2016 and March 12, 2019, Uber reached a $100 million proposed settlement in April 2016 with about 385,000 drivers in California and Massachusetts; however, the proposal was rejected by the federal court because the amount allocated to the drivers’ California Private Attorneys’ General Act claim (“PAGA”) was regarded by the judge as inadequate. On March 29, 2019, the court approved the new settlement terms that will apply to a far smaller class of drivers (13,600 as compared to 385,000). Uber was able to trim the number of potential class members by including in an updated driver contract an arbitration clause with a class action waiver. Drivers were given a period of time to opt out of the arbitration provisions, but only 4% of the original number of drivers chose to do so.

Although the arbitration provision was challenged in court, Uber prevailed.  As a result, it was able to limit the number of class members to the very small percentage that had opted out. Those opt-outs are covered by the $20 million settlement. Under the monetary terms of the settlement, $5 million will be deducted for attorneys’ fees, $14,800,000 will be paid to class members who submit timely claims; $146,000 will be allocated for administrative costs, and $40,000 will be paid as incentive awards for the settlement class representatives. The settlement does not require the company to convert drivers into employees; rather, they will remain independent contractors.  Non-monetary relief includes the company’s agreement to modify its business practices by maintaining a comprehensive, written policy governing the deactivation of drivers’ accounts that will be easily accessible online; providing safeguards for the drivers under the deactivation policy such as giving advance warning before a driver is deactivated for reasons other than safety, physical altercation, discrimination, sexual misconduct, etc.; instituting an appeals process; and giving a deactivated driver the opportunity to take a course and be eligible for reactivation. This settlement does not include any PAGA claims. O’Connor v. Uber Technologies, Inc., No. 13-cv-03826 (N. D. Cal. Mar. 11, 2019); Yucesoy v. Uber Technologies, Inc., No. 15-cv-00262 (N. D. Cal. Mar. 29, 2019).

Source: from the March 2019 Independent Contractor Misclassification and Compliance News Update | Locke Lord LLP – JDSupra

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