The troubled Uber has finally reached a settlement that will cost them up to $100 million. As part of the class-action suits resolution, the company agreed to be more transparent regarding their rating system and under what circumstances they can ban drivers. But sadly, drivers remain as individual contractors.
The $60 billion ride-sharing startup has been long questioned and debated by drivers about their status: should they remain as individual contractors or be full time employees. But Uber sticks with the former model.
The company announced Thursday that they have already reached a settlement for their several class-action lawsuits. The resolution will require Uber to pay of up to $100 million, according to Forbes. It will include $84 million upfront and second payment of $16 million contingency if the company holds an initial public offering and the average valuation increases to 1.5 of its last financing round. It has been known that Uber became the most valuable private technology company in the world in December 2015 with $62.5 billion worth.
The settlement means that Uber will stick to their individual contractor model, as opposed to full employment. But the company is making some additional concessions in the two settlements (one in California and one in Massachusetts). This lets the company to stay away from paying the costs of full-time employees, including minimum wage and Social Security payment share, according to NYTimes.
Additionally, Uber will become more transparent regarding their rating system and the grounds that they can ban drivers from using the app. The company is exploring creating an appeals process for Uber drivers who have been banned of poor rating.
Uber also agreed not to deactivate members who regularly decline to accept requests from passengers, a practice that hurts the overall standing of the driver. Rather than banning, they may be temporarily logged out of the app and unable to accept new request if they continue disregarding requests.
"As Uber has grown-over 450,000 drivers use the app each month here in the U.S.-we haven't always done a good job working with drivers," CEO Travis Kalanick wrote in a company blog post. "For example, we don't have a policy explaining when and how we bar drivers from using the app, or a process to appeal these decisions. At our size that's not good enough. It's time to change."
Uber said that the settlement as well as the changes in treating their drivers is part of the maturity phase of the company that started from small business to a global organization in roughly six years.
