Ride-hailing service Uber has agreed to pay $100 million to settle the lawsuits filed by drivers demanding employee status. Under the settlement, Uber would provide that amount of money to the drivers, but they will stay as independent contractors instead of employees.
The deal settled that the plaintiffs in California and Massachusetts would receive $100 million in total. At first, the company will provide $84 million to about 385,000 drivers represented in the cases, and the remaining $16 million will be released if the company goes public and meets certain goals.
In addition to the financial settlement, the deal also stated several other policy concessions between the company and the drivers. According to The Seattle Times, Uber will allow drivers to put signs in their cars stating that tips are not included in the ride fee. The company also agreed to improve the communication systems with drivers regarding their ratings.
Furthermore, the company will also release a clear deactivation policy that will specify the reasons drivers can be deactivated. Previously, drivers could be deactivated by Uber without explanation. The settlement also stated that Uber cannot deactivate drivers for not accepting a minimum percentage of ride requests they receive.
Under the deal, Uber is also responsible for allowing arbitration in disputes with drivers. In addition, the company also agreed to help start drivers' associations in both California and Massachusetts. The company also agreed to meet wit the association's leaders every a quarter to discuss the group's concerns.
The agreement specifies that the drivers will remain as independent contractors and not employees, like their demands. However, the attorney representing the plaintiffs, Shannon Liss-Riordan, said in a statement that the offers made by Uber were very significant changes that will improve work conditions for Uber drivers as reported by re/code.
In a blog post, Uber CEO Travis Kalanick explained that remaining as independent contractors would give drivers flexibility. On the other hand, by maintaining the contractors status for its drivers, Uber can keep its costs low, as noted by The New York Times. The company said keeping aside the lawsuit, many of the changes were a part of its overall maturation process as a rapidly-growing startup to a global company.
Uber has agreed to settle with the lawsuits that represented 385,000 of its drivers in California and Massachusetts. Under the deal, the company will pay in total of $100 million and make some changes in its system and policy as specified, including policies about tips, deactivation policy, and rating system.
