Uber Settles with Drivers, but Changes Ahead

Uber Settles with Drivers, but Changes Ahead

While it is easy to believe that the disconnect between Uber and those that drive for the company gives the firm all the power, drivers are slowly gaining strength. There have been murmurs of unions forming in Seattle, and a $100 million class action lawsuit settlement is resulting in numerous changes.
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Drivers are increasingly seeking to become employees of Uber and not just freelance independent contractors. Uber understands that giving drivers full employee status would mean offering such things as health insurance, employee benefits, and expenses. To avoid this the company effectively paid off drivers to the tune of $100 million to keep them as independent contractors.

Interestingly, this was in only two US states, California and Massachusetts, which means Uber could face numerous more cases like this around the world. It seems increasingly likely that drivers will eventually win the power struggle and be awarded full employee status. Uber may be valued at $40 billion, but even the ride-sharing giant cannot afford to payout $100 million on a regular basis.

While keeping drivers as freelance operatives, Uber had to make some concessions beyond the settlement sum. The company agreed to pay $84 million directly to drivers, a further $16 million dependent on the company’s growth, while also agreeing to driver concerns like comparing individual ratings and driver associations with improvement courses.

The company has dodged an employment bullet, but the company seems to realize that now it must work more closely with drivers to avoid similar class actions arising. CEO Travis Kalanick confessed as much in a blog post on the company’s website.

“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. At our size that’s not good enough. It’s time to change.”

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