Uber will pay $20 million to its drivers in California and Massachusetts to settle a class-action lawsuit that raised the question of what responsibility the company has to its workers.
Lawyers for Uber said in a court filing Tuesday that they had agreed to a settlement with thousands of drivers. U.S. District Judge Edward Chen is set to hear the two sides’ motion on the preliminary settlement on March 21 in his San Francisco courtroom. Ultimately he will decide whether the settlement can go forward.
While the deal won’t end the longstanding and thorny question of whether Uber’s drivers are employees or contractors, the settlement likely will resolve the lawsuit that has forcefully pushed this question into court. Numerous gig-economy companies including Uber, Lyft, DoorDash and Instacart save millions of dollars annually by not classifying drivers and delivery people — the backbone of their workforce — as employees.
The companies do not pay health insurance, retirement, unemployment or other benefits that many traditional employees expect. Uber uses the phrase “driver-partners” to refer to most of its workers. The lawsuit, O’Connor v. Uber, has been pending in federal court since it was brought in August 2013 and argued that thousands of drivers had been misclassified as contractors and were improperly denied business expense reimbursement.
The new settlement covers approximately 11,000 drivers in California and 2,600 in Massachusetts who will collectively receive the $20 million. According to a Monday court filing, the “average net settlement share” will be $2,206 per driver after attorneys’ fees, more than five times what had been proposed three years ago.
Legal experts say that Uber’s impending initial public offering likely brought pressure to settle the case.
- Uber to pay $20 million to its ‘partner-drivers’ in California and Massachusetts.