Ride-hailing service Uber has agreed to pay up to $100 million to settle a class-action lawsuit that resolves a major challenge to its business model by allowing it to keep its Massachusetts and California drivers as independent contractors.
Uber CEO Travis Kalanick called the classification of employees the "key issue." Out of the $100 million proposed payment, $84 million is guaranteed to drivers and $16 million is contingent on an increase in Uber's value.
Uber will also provide drivers with more information about their individual ratings and how they compare with their peers. Uber will establish a "driver's association" for Massachusetts and California drivers, with regular meetings to "discuss the issues that matter most to drivers," Kalanick said.
The case against Uber had been closely watched in Silicon Valley, as other companies in the on-demand tech economy share Uber's reliance on independent contractors. The case was due to go to trial in San Francisco federal court in June.
"We realize that some will be disappointed not to see this case go to trial," said Shannon Liss-Riordan, the Boston labor attorney who sued on behalf of the drivers. But Liss-Riordan said the plaintiff drivers faced significant risks of losing in court. Nothing about the settlement prevents a future court, or U.S. labor authorities, from deeming Uber drivers as employees, she said.
Kalanick's statement said, "Six years ago when Uber first started in San Francisco, it was easy to communicate with the handful of drivers using the app. Austin Geidt, who ran marketing, called each one regularly to get their feedback and make sure things were working well. It was clear from those early conversations that drivers really valued the freedom Uber offered. Today, while the number of drivers using our app has grown dramatically, their reasons for doing so haven't changed. In the U.S. almost 90 percent say they choose Uber because they want to be their own boss. Drivers value their independence -- the freedom to push a button rather than punch a clock, to use Uber and Lyft simultaneously, to drive most of the week or for just a few hours."
As part of the settlement Kalanick also outlined infractions that can get drivers fired from Uber. In addition to drinking and driving, and discriminating against fares on the basis of race or gender, lesser infractions include a bad-smelling car or too much air freshener, and refusing too many fares. But drivers who are "deactivated" in California or Massachusetts will now have the option to fight to keep their jobs.
(c)2016 the Boston Herald
