Uber settles suit with 385k drivers for $100 million

Uber drivers will continue as independent contractors rather than employees.

Uber will strike a deal with 385,000 drivers to be able to not treat them as regular employees, rather than go to court. The number is significant, as the app is used by roughly 450,000 drivers monthly.

According to the Boston-based attorney representing the drivers from California and Massachusetts, the settlement means Uber doesn't have to offer its drivers employee benefits – such as a minimum wage, pay for overtime or reimbursement for their driving expenses. Shannon Liss-Riordan says there would have been a risk that the San Francisco-based jury would have sided with the company, as Uber use is widespread there.

The court case was scheduled to go on trial in June. The settlement is still dependent on a federal judge's approval, but it would mean Uber would immediately pay $84 million to the drivers. The rest of the sum will be paid if the company goes public and its valuation grows 150 percent within the first year of an IPO, compared to Uber's December 2015 value. The money paid will depend on the miles driven for Uber, and Liss-Riordan says drivers with more than 25,000 miles clocked would possibly receive an average of $8,000.

Uber CEO Travis Kalanick underlines what he calls the importance of Uber drivers' freedom in a blog post published on Thursday about the settlement. Kalanick argues the drivers can remain as independent contractors, "to be their own boss", "to push a button rather than punch a clock", and "to use Uber and Lyft simultaneously, to drive most of the week or for just a few hours". But another issue in the original lawsuit is that it might make earning tips more transparent, with Uber letting the drivers notify passengers that tips aren't included, nor required, but appreciated. Earlier, drivers have claimed that Uber included tips in the fare but didn't pay them to the drivers.

The settlement has also fueled Uber to publish a deactivation policy, which makes driver removal dependent on a sufficient cause instead of Uber being able to remove them from the platform at will, and from now on the drivers will be able to form a separate, union-like association to address their possible grievances. Uber will fund this association and meet with them on a quarterly basis, says Kalanick.

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