A federal judge in California has refused to accept a proposed $100 million settlement in a class action lawsuit against ride-sharing service Uber, which is accused of misclassifying its drivers as independent contractors when they are, in fact, employees.
The U.S. District judge in his order stated that the settlement was just 10 percent of what the drivers’ lawyers estimate the company would have to pay in legal fees. Plus, it only accounted $1 million for state penalties that could easily pile up to more than $1 billion. In light of these facts, the judge wrote, the settlement proposal was not fair to the workers, and neither was it reasonable or adequate.
It’s unclear what this and other cases are going to mean for the future of the company. The company’s fast-paced growth and low prices are contingent on the fact that it doesn’t have to pay its drivers fuel reimbursements or offer health insurance. But the company’s profitability is not the concern of the courts. The issue is whether more than 385,000 workers in California and Massachusetts (the parties to the lawsuit) were cheated out of these employee benefits by being wrongly classified. They argue the company had enough control over their day-to-day activities to be deemed employees – not independent contractors. Continue reading