Two States Decide Uber Drivers Are Contractors Not Employees

Uber may be treating its drivers as independent contractors, but recent legislation has pushed to get these workers employee status. The company has reached a settlement in a pair of class-action lawsuits in California and Massachusetts. Although it will have to cough up millions of dollars, Uber will be able to continue classifying drivers as contractors in the two states.

Under the settlement, Uber will pay at least $84 million to roughly 385,000 drivers represented in the suits. That payment will go up another $16 million if Uber goes public and its valuation increases to one and a half times that of its last financing round.

The company also agreed to better communicate its policies, i.e. explaining the circumstances under which it might bar drivers from using the app. Uber promised to help fund a driver’s association in California and Massachusetts and hold regular meetings to discuss potential issues.

Although the settlement only applies to drivers in two states, it may set a precedent for legislation in other states. The settlement is a victory in disguise for Uber, as it won’t have to provide certain benefits to drivers given they are independent contractors and not employees.

In a blog post titled “Growing and Growing Up,” Uber said it was pleased with the classification rules. But it also admitted to some mistakes.

“We haven’t always done a good job working with drivers,” CEO Travis Kalanick wrote, citing the company’s lack of clear policy explaining how drivers get banned from the app and a process for appealing those decisions. “At our size that’s not good enough. It’s time to change.”

Source: Uber, The New York Times

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