Uber Settles California Driver Misclassification Lawsuit or $20 Million

A long-running legal battle with California and Massachusetts drivers for Uber has settled with the ride-sharing tech firm paying a $20 million settlement – but no deal to name them as employees versus independent contractors. Los Angeles employee misclassification attorneys know that has many legal analysts opining Uber was the one that actually won big this round. Los Angeles employee misclassification attorney

The drivers likely acquiesced to this deal, rather than pushing ahead, after a federal appellate court ruled last September that drivers could not join together for a class action, and would instead be required to individually arbitrate each claim. As TechCrunch.com reported, that diminished a lot of the power plaintiffs in that original case had.

As part of the labor and employment lawsuit settlement, Uber has agreed to some other concessions as well. For example, Uber agreed to alter the way it removes drivers from the service, in turn boosting the transparency of the process. In a now-published policy, the tech firm details how it removes drivers from its rosters. The company also plans to institute a means for booted workers to appeal. Drivers will also have the chance to take classes offered by the firm to learn how to improve the quality of rides for customers.

Why Employee Classification Was a Key Issue for Uber

The reason the settlement was important for Uber is that the company is preparing to go public, highly anticipated to be one of the biggest tech offerings in several years. By some estimates, the company is valued at as much as $120 billion. A spokesman for the firm told reporters the company had “changed a lot” from the time the lawsuit was filed.

As part of its further plan to appease drivers for the tech firm, Uber plans to allow drivers to purchase shares at its initial public offering. Even so, by not classifying drivers as employees, the company effectively gets a windfall, as it is not required to pay certain taxes, workers’ compensation, overtime, health care benefits, minimum wage, etc.

Still, an employment attorney representing the drivers in this employee misclassification lawsuit stated the settlement reached was nonetheless “substantial.” Drivers are expected to receive roughly 37 cents for every mile they’ve driven for Uber. The main benefit they get by not being classified as employees is scheduling flexibility.

Los Angeles employee misclassification attorneys know this issue of driver classification has been a major sticking point for the California-based firm. It and other rideshare companies have faced class action litigation. California courts (of the few states that have weighed into the disputes) have ruled that Uber drivers can be considered independent contractors.

This California labor and employment lawsuit was first filed in 2013, and Uber agreed to settle it three years later for $84 million – with more payment due (up to $16 million) after its initial public offering. However, the agreement was tossed by a federal judge as being unfair to drivers. But then last year, the federal 9th Circuit court ruled the company could compel the drivers to take their cases to arbitration – one-by-one. That resulted in a lower settlement for the class, but also prompted some drivers to opt-out. Their arbitration claims are pending, but we may never know the outcome of those, as arbitration agreements do not need to be made public.

Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 714-937-2020.

Additional Resources:

Federal appeals court rules Uber drivers must arbitrate claims, Sept. 25, 2019, By Jonathan Schieber, TechCrunch.com

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U.S. Supreme Court Allows 9th Circuit’s Ruling on CA Trucker Classification to Stand, March 10, 2019, Los Angeles Worker Misclassificication Lawyer Blog