Drivers working for Uber in California and Massachusetts settled with the company over employment status last month, but still won a major victory in the form of a large payout. The most cynical view is that Uber bribed the drivers into accepting that they are not actually employees but freelancers, a truce that meant the company paid over $120 million in settlements.
However, that is small change compared to how much the company would have had to pay if the drivers had pursued their case and won. Victory would have meant those drivers being viewed as employed contractors for Uber, and as a consequence the company would have had to pay around $730 million in expense reimbursements.
Of course, along with the cash settlement, Uber had to make some concessions to stop drivers from pursuing their case, but the compromise was certainly preferable to the alternative. The company agreed to create driver training courses, allow drivers to create associations, and allow the comparing of ratings.
The company dodged a proverbial bullet that could have seen it having to treat drivers as employees, which would have meant such things as health insurance, employee benefits, and expenses. The court documents surrounding the case were released to the public on Monday and show that the company would also have had to include expense reimbursements such as for gas, maintenance, and potentially auto insurance.
The problem for Uber is how it stops other driver groups in other regions from pursuing similar actions. At best the company would be able to keep paying drivers off, but at worst (for Uber at least) the drivers will gain more power and be recognized as employees.