UBER has agreed to pay $100 million to resolve two wage and hour class actions pending in California and Massachusetts, but their drivers will remain independent contractors. The class action settlement must first be approved by Judge Edward Chen of the District Court of Northern California before it becomes final.
Despite the hefty price tag, if there is a winner in this settlement, it is most likely UBER. The ride-sharing giant valued at over $60 billion dollars can easily part with the $100 million. In addition, they have also agreed to some non-monetary concessions – drivers will be given more information about rider feedback, more advanced notice before they are terminated, and an opportunity to appeal termination decisions. Drivers will also be permitted to encourage – but not require – tips from riders. Finally, UBER will assist drivers in forming “Driver’s Associations,” however those associations will not have the authority to collectively bargain on behalf of drivers.
Despite all they are agreeing to give up, UBER’s CEO is still “so pleased” with this settlement because it allows the company to continue classifying its drivers as independent contractors, not employees. Such a classification allows UBER to avoid providing benefits such as minimum wage and overtime guarantees, health insurance, payroll taxes, and unemployment compensation, to name a few. For more details on the implications of independent contractor status, click here.
Even if the settlement is approved, however, the debate over drivers’ (and other “gig” workers’) classification will continue. This settlement simply kicks the can down the road. As the nature of work changes, and the cost of actual “employees” continues to rise, it is a question that courts and legislatures will eventually have to answer.
If you are denied benefits because you are misclassified as an independent contractor, contact Kimble Law today.