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Car and Driver: Uber Settles with Drivers Over Worker Status for $100 Million

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With each passing year, Uber becomes less of an anti-establishment protest against traditional taxi services and more of an established corporation. Well, if one judges by the size of the lawsuits, anyway.


The latest involves an $84-million settlement reached with 385,000 Uber drivers alleging they should be compensated as full-time employees rather than 1099-filing freelancers. Another $16 million will be levied if Uber goes public and its average valuation increases by one and a half times since it last raised funds (Uber is valued at more than $62 billion). Drivers have been upset at being banned without explanation, docked for not accepting ride requests, and other myriad details that Uber attempts to strong-arm on a network of for-hire drivers, most of which aren’t licensed or policed by any city government. The settlement only pays drivers in California, Uber’s startup home, and Massachusetts. These drivers, as well as all Uber drivers worldwide, will still be classified as contractors, which exempts Uber from paying benefits, taxes, minimum wage, unemployment, and all the other associated costs of normal payroll.


“That said, 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,” wrote CEO Travis Kalanick on Uber’s website. “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 will now enforce a “driver deactivation policy” that explains when and why Uber will either lock them out of the app temporarily or ban them entirely. The company will create an appeals process for deactivated drivers in California and Massachusetts, and in all cities it will average the number of cancellations and warn drivers first who are exceeding the average, among other improvements. Similar workers’-rights lawsuits are pending in Arizona, Pennsylvania, and Florida, according to The New York Times.


Earlier this month, Uber agreed to pay up to $25 million to the cities of San Francisco and Los Angeles for not providing proper background checks. A total of 25 drivers in these cities had criminal records that Uber didn’t notice, according to The Times. Then there’s the burgeoning problem of “app-based driver associations” pushing for unionization (they’re now allowed to organize in Seattle).


And that pesky issue of personal car insurance refusing to cover what is, ultimately, a commercial activity? Insurance companies are explicitly putting drivers on the hook for any claims while they’re Ubering, despite Uber’s insistence of providing coverage each time they’ve accepted a ride. Turns out the Bay Area, at least when it comes to successful, disruptive startups like Uber, is quite the gray area these days.


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