Uber Settles Labor Cases in California, Massachusetts for $100 Million

On Thursday, April 21, 2016, Uber settled class-action lawsuits related to worker misclassification in California and Massachusetts. The settlements, under which Uber will pay as much as $100 million to the roughly 385,000 drivers represented in the cases, will allow the company to continue to categorize drivers in those states as independent contractors. While the settlement is for a large sum, the end result of the decision is a positive for the company as it ensures the viability of its practice of classifying its drivers as contractors rather than employees.

In addition to the financial settlement, Uber also agreed to address other concerns of the plaintiffs, including providing them with more information about how and why drivers are barred from using the app, as well as aiding in creating new “drivers associations” in both California and Massachusetts. Drivers in those states will also now have more flexibility when they choose to accept or cancel riders. Previously, Uber penalized drivers who accepted a fare and then cancelled thereafter. This specific agreement will likely help to shield Uber from accusations that those drivers should be classified as employees rather than contractors.

These concessions may provide a blueprint to how Uber will work with drivers and regulators in states that are not impacted by the settlement, but should also enable Uber to maintain its low-cost model. Uber currently faces pending labor-related lawsuits in Florida, Arizona, and Pennsylvania.