Judge overturns Uber’s $130m settlement with drivers

A US federal judge on Thursday struck down a proposed class-action settlement between Uber and a group of its current and former drivers, potentially continuing a lawsuit that questioned a key tenet of the ride-hailing company’s business.

Under a settlement forged in April, Uber had been set to pay up to $US100 million ($130 million) in reimbursement damages to nearly 400,000 drivers. The drivers first sued Uber in 2013, claiming that they should have been classified as employees rather than independent contractors of the company. Uber has opposed having its drivers be categorised as employees, a more costly designation that would require the company to pay payroll taxes and ensure that drivers earn at least the minimum wage.

In documents filed Thursday in US District Court for Northern California, Judge Edward M. Chen ruled that the April settlement was “not fair, adequate, and reasonable” as grounds for denial. He also said a small portion of the $US100 million amount reflects only 0.1 per cent of the potential full verdict value of the case.

The decision is a blow to Uber in a long-standing battle with its drivers, many of whom have argued that the type of control Uber exerts over them constitutes conditions of employment. As employees, Uber drivers would be entitled to reimbursement for expenses and vehicle maintenance, costs that as independent contractors they now pay themselves.

As part of the settlement agreement, Uber also made other concessions, like recognising and speaking with quasi-unions of its drivers in New York and other states. It also allowed drivers to accept tips at the end of each ride.

Uber had hailed the settlement as a victory for drivers who wanted to maintain flexibility in their roles. But others said the reimbursement amount was far too low. Uber is valued at $US62.5 billion, and in June it raised $US3.5 billion from Saudi Arabia’s Public Investment Fund; the company also recently agreed to sell off its China operations to the Chinese ride-hailing company Didi Chuxing.

“The settlement, mutually agreed by both sides, was fair and reasonable,” Matt Kallman, an Uber spokesman, said in a statement. “We’re disappointed in this decision and are taking a look at our options.”

Shannon Liss-Riordan, the lawyer who filed the driver lawsuits, said in an email that she was disappointed by the judge’s decision on the settlement “but I understand and I have heard him.” She said it was possible that both sides could reach a revised agreement, but that if not, she planned to take the case to trial.

Bhairavi Desai, the president of the National Taxi Workers Alliance, a union of drivers with chapters in New York and California, which helped a group of 200 Uber drivers formally object to the settlement, said her group was “pretty elated” by the judge’s overturning of the agreement.

Desai said that because the California case was one of the earliest prominent cases against Uber involving misclassification, the settlement “could have slowed down the process for everyone else” intent on challenging their status and leave drivers to wonder whether there was any real upside in bringing cases.

She added that while the initial lawsuit did not seem to attract much interest from the Uber drivers her members were in contact with, the settlement terms provoked widespread outrage. “The drivers felt so scorned by the settlement that many came forward at that point,” she said.

The New York Times

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