Uber Settles 2 Lawsuits Over Whether Drivers Are Employees Or Contractors
RENEE MONTAGNE, HOST:
Uber has agreed to settle two class-action lawsuits brought by its drivers. One was started in Massachusetts, the other in California, where drivers sued to be considered employees eligible for benefits and not just independent contractors. Under the settlement, they do remain contractors, but Uber will pay up to $100 million to be shared by as many as 385,000 drivers. Here to discuss the deal is NPR's Aarti Shahani. Good morning.
AARTI SHAHANI, BYLINE: Good morning.
MONTAGNE: So talk to us about this settlement. What were the terms?
SHAHANI: Well, they're proposed terms. Basically, there were these two cases, different states, but brought on by the same law firm. And the settlement was filed in U.S. District Court in California. If the judge approves the settlement, we'll know that in a few months then Uber pays $84 million to drivers - as you said, many drivers.
Anyone who's completed at least one trip in either state from the beginning of when Uber started up until the judge gives preliminary approval is eligible. And if Uber decides to go public and its value goes up on Wall Street, it would pay an additional 16 million. So a hundred million total.
MONTAGNE: There is a similar lawsuit against Uber's competitor, Lyft. But a couple of weeks ago, the judge in that case rejected the settlement, $12 million, for the drivers. The proposed Uber settlement is a lot more money.
SHAHANI: You know, the judge may approve the amount or they may tweak it. The real fight isn't over the exact dollar figure. You know, the much bigger issue for Uber, as well as for Lyft, is are the people driving for them employees or independent contractors?
If they're contractors then they get paid for hours worked but no benefits - Social Security, worker's comp, et cetera. Under this settlement, Uber's drivers remain independent contractors in the two states, which are two of Uber's biggest markets. That could set the tone in other states as well. So it's not a bad price tag to put a very big issue to bed or at least a long nap.
MONTAGNE: And does that mean this deal is a win for the workers?
SHAHANI: Well, money aside, a big win for the drivers is that Uber has to become a better communicator. Here's a remarkable fact. Up until now, the company has no appeals process in place for drivers who get axed. So say you decide to invest in a car, make Uber your main job, and then you don't let some passengers drink or smoke a joint in your backseat. It happens in California.
You know, maybe you get bad ratings and Uber boots you out. No system in place to defend yourself. Under the settlement, Uber can't deactivate drivers at will. There has to be sufficient cause - warnings in most instances and an appeals process. And also, by the way, Uber has to let passengers know - and this may come as a surprise - tips are actually not included in the fare. So feel free to tip.
MONTAGNE: And Aarti, the CEO of Uber published a blog post about this settlement entitled, and I'm quoting here, "Growing And Growing Up." What's going on there?
SHAHANI: Yeah, I feel like that's the theme for him for a couple of years now, and, you know, that's OK. Puberty can take a while. Travis Kalanick is this slick California tech guy, kind of bro-y (ph), and he's come under criticism for that. And it matters for the business. The attorney who represents the drivers, a woman named Shannon Liss-Riordan, she's this hard-nosed, Northeast labor lawyer. Her nickname is actually Sledgehammer Shannon. And she's clearly pushing the company to grow up.
MONTAGNE: Thanks very much.
SHAHANI: Thank you.
MONTAGNE: That's NPR's Aarti Shahani in San Francisco. Transcript provided by NPR, Copyright NPR.