Online transportation network company Uber has presented a settlement of the lawsuits filed by Uber drivers in California and Massachusetts. The settlement allows Uber to keep its current business model and also provides benefits to its drivers.
The Uber settlement pushes drivers in the involved states to remain independent contractors and not employees, a decision that the company will prove beneficial to Uber drivers. Uber says that 90 percent of its drivers want to be independent contractors and "be their own boss."
"Drivers value their independence—the freedom to push a button rather than punch a clock, to use Uber and Lyft simultaneously, to drive most of the week or for just a few hours," Uber CEO and Co-Founder Travis Kalanick wrote in a blog post.
Uber will pay up to $100 million in settlement – $84 million to the drivers and then $16 million when Uber goes public and its valuation from December 2015 boosts one and a half times within a year of its IPO. The settlement money will be divided up to drivers based on the number of miles they have driven using the Uber app.
Through the Uber settlement, the company also introduces a policy detailing how and what drivers terminated from using the ride-hail app. Kalanick explains that this new deactivation policy is necessitated by the growing popularity of the app, with more than 450,000 drivers using it.
"We don't have a policy explaining when and how we bar drivers from using the app, or a process to appeal these decisions. At our size that's not good enough. It's time to change," Kalanick stated.
Still to be approved by a judge, the Uber settlement will also allow Uber drivers solicit and receive tips from customers. They will also be properly informed regarding their individual rating.
Uber also plans to establish a driver's association, one in California and another in Massachusetts. The company promises to subsidize these groups and meet them quarterly to talk about and solve issues experienced by the members.
Uber is awaiting the court's approval of the settlement. Shannon Liss-Riordan, the drivers' attorney, knows that "some will be disappointed not to see this case go to trial," although she emphasizes that the case is being settled and not decided.
