Uber settled a lawsuit with drivers who sought employment status, resolving a longstanding legal issue.
The fight over the classification of ride-sharing drivers as independent contractors appears to be over after Uber announced that it settled a pair of long-gestating lawsuits for $20 million.
Uber Technologies Inc. will pay $20 million to settle California lawsuits challenging the company’s classification of drivers as independent contractors, and not employees owed the benefits of traditional employment.
The company gets to continue not paying for traditional benefits like paid sick time and workers’ compensation.
Resolution of the long-standing fight over benefits and pay comes as Uber is preparing for its initial public offering later this year. The litigation attacked the ride-sharing company’s business model of treating its drivers as contractors to avoid the costs of paying a minimum wage, overtime, sick leave and health insurance.
The cases turned on whether drivers were essentially forced by their contracts to resolve any conflicts one-on-one, behind the closed doors of private arbitration and forbidden to join forces in class-action lawsuits. Drivers argued Uber made it onerous for them to opt-out of the arbitration provisions.
The settlement still requires a judge’s approval, but Uber is ready to put the past behind it.
“Uber has changed a lot since 2013,” a spokesperson said in a statement. “We have made the driver experience even better through improvements like in-app tipping, a redesigned driver app, and new rewards programs like Uber Pro. We’re pleased to reach a settlement on this matter and we’ll continue working hard to improve the quality, security and dignity of independent work.”