The lawsuit had claimed that Uber [UBER.UL] drivers are employees
and thus entitled to reimbursement of expenses.
The case against Uber had been closely watched in Silicon Valley, as
other companies in the on-demand tech economy share Uber's reliance
on independent contractors. The class action had been scheduled for
a trial in San Francisco federal court in June.
"We realize that some will be disappointed not to see this case go
to trial," said Shannon Liss-Riordan, an attorney for drivers.
However, Liss-Riordan said the plaintiff drivers faced significant
risks of losing if the case moved forward, particularly because a
federal appeals court had recently agreed to review an order
allowing Uber drivers to sue as a group.
Nothing about the settlement prevents a future court, or U.S. labor
authorities, from deeming Uber drivers as employees, she said in a
Out of the $100 million proposed payment, $84 million is guaranteed
to drivers. Uber could also pay an additional $16 million, but only
if the company's valuation grows by 150 percent above its December
2015 financing round within a year after any initial public
Uber was valued at $62.5 billion in that December funding round.
Uber agreed to some changes in its business practices, including the
institution of a policy for deactivation of drivers, chief executive
Travis Kalanick said in a blog post about the settlement. Some
drivers had long complained that Uber arbitrarily terminated users
from its platform.
[to top of second column]
Uber is "pleased" that the deal "recognizes that drivers should
remain as independent contractors, not employees," Kalanick said in
The company also agreed to help create a drivers' association in
both states. Liss-Riordan said that while such groups are not
officially a union, they can act like a union in bringing grievances
to management's attention.
The settlement is similar to a separate agreement announced with
Lyft drivers earlier this year, though the Uber agreement is much
larger given that Uber has many more drivers.
Over 450,000 U.S. drivers currently use the app each month, Kalanick
said in the blog post.
The Uber deal must be approved by U.S. District Judge Edward Chen in
(Reporting by Dan Levine; Additional reporting by Heather
Somerville; Editing by Michael Perry and Muralikumar Anantharaman)
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