On Thursday evening Uber announced that it had settled a pair of class action lawsuits in California and Massachusetts for at least $84 million, with the possibility of a $100 million payout. The settlement extracted a number of concessions from the popular ride-hailing company, including more transparency about how it rates drivers, less stringent deactivation policies for drivers who decline rides, and the right for drivers to hang signs in their windows that say “tips are not included.”
Individual drivers will get a piece of the settlement based on how many miles they’ve driven for Uber with passengers in their car. California and Massachusetts drivers who have driven more than 25,000 miles “may receive $8,000 or more on average” according to Shannon Liss-Riordan, the class action lawyer who represented the drivers. “Drivers who drove fewer miles will receive lower shares.”
However, one major fact remains unchanged: the settlement stipulates that drivers will remain independent contractors, not employees. Some drivers are not happy about that, or with the settlement in general.
On Uber People, a popular discussion board for drivers, one particularly dyspeptic poster whose location is listed as California let loose:
What an absolute joke of a settlement. This is the same joke of a settlement the judge already unapproved for Lyft.
We basically get nothing. $200 on average to each driver ??? What the hell is that ? We still aren’t classified as employees so that means that any ongoing costs that Uber should be paying won’t be paid to us for reimbursements that we CONTINUE to acrue and Uber still doesn’t have to add a tip option.
The settlement is just that, a settlement, so it doesn’t set precedent, but other drivers were still concerned it would affect states other than California and Massachusetts. Specifically, they’re worried Uber will use the settlement as a policy template. Still others were concerned that the concessions of the settlement would be mostly for show, particular Uber’s agreement to the formation of a Driver Association. According to the Liss-Riordan statement, the Association will “have leaders elected by fellow Uber drivers, who will be able to bring drivers’ concerns to Uber management, who will engage in good faith discussions (on a quarterly basis) regarding how to address these concerns.”
“The biggest joke here is the drivers being able to meet with and ‘voice’ their issues at Uber,” one Southern Californian driver wrote. “OMFG what nonsense. Uber will be in full control of this ‘forum’ which will always end with Uber saying ‘Well, we appreciate your input, thank you and have a nice day.'”
Similar anger bubbled up in closed Facebook groups, where Uber and Lyft drivers congregate to discuss their work for the apps. “So Shannon sold us out?” wrote one commenter, referring to Liss-Riordan, the lawyer representing drivers in both cases. Another quickly responded, “Of course. Class actions usually benefit the lawyers more than the plaintiffs. She’ll probably clear a cool $30 million.”
Liss-Riordan considers the settlement a victory. A statement she issued last night called the settlement “historic.”
“We are very proud of this achievement and look forward to these changes being implemented for the benefit of Uber drivers,” said the statement, which also laid out a litany of risks for the case if it had gone to trial:
We faced the risk that a jury in San Francisco (where Uber is everywhere and quite popular) may not side with the drivers over Uber. We faced a risk that the Ninth Circuit may disagree with the district court on his rulings certifying the case as a class action and holding Uber’s arbitration clause to be unenforceable. If the Ninth Circuit Court of Appeals had disagreed with the district court on either of these two points, then the vast majority of Uber drivers would never receive anything at all for these claims and the non-monetary changes that are being made as a result of this settlement would not occur. Just recently, the Ninth Circuit issued an unusual order agreeing to review the district court’s class certification order right away, possibly before the upcoming trial (and may have issued an order to delay the trial).
The sentiment that the settlement is a victory was echoed by the National Employment Law Project, an advocacy organization representing low-wage workers. Their Executive Director, Christine Owens, issued a statement this morning.
“Uber drivers have forced the company to address some of their core concerns about arbitrary firings and the company’s no-tipping rules, and to sit down and negotiate with them.” Owens said, though she also aired her own concerns about employee classification. “As is typical in a settlement, not all of the issues in the case were resolved. In particular, the settlement does not address the key issue of misclassification of the workers as independent contractors.”
There’s not yet a website where drivers can apply for their part of the settlement. “It hasn’t been set up yet because first we have to go through the court approval process,” said Liss-Riordan. “Then drivers will get notices emailed to them. We are posting information on our website, www.uberlawsuit.com.”
Liss-Riordan said any driver unhappy with the settlement could opt out and pursue their claim individually. She told me via email that the percentage of the settlement she and her partners will receive in fees hasn’t been determined yet. However, they’re going to apply for a quarter of the settlement, less than the 30 to 40 percent some concerned drivers thought the lawyers would be receiving.
“We’ll apply for 25%,” she wrote. “Courts in California typically approve amounts from a quarter to a third.”
What that percentage is drawn from remains subject to some change. In Uber’s letter announcing the settlement, CEO Travis Kalanick outlined how the payment of $84 million could grow:
Uber will pay $84 million to the plaintiffs. There will be a second payment of $16 million if Uber goes public and our valuation increases one and a half times from our December 2015 financing valuation within the first year of an IPO
The letter also coincided with the publication of Uber’s U.S. Driver Deactivation Policy, a part of the settlement. This is the first time any such policy has been made available publicly since the company was started in 2009. Kalanick is also still facing an antitrust lawsuit over price-fixing which was filed against him personally in New York.
Despite their status as independent contractors, some drivers for Uber and similar ride-sharing apps like Lyft have spent the past couple years organizing and seeking representation. In December 2015, Seattle’s city council passed an ordidance allowing app-based drivers to unionize. Though their prospects are varied and uncertain, movements to unionize app-based drivers are also ongoing elsewhere, including New York City.
Meanwhile, one forum is using driver dissatisfaction with the settlement as yet another opportunity to recruit drivers for Uber’s competition, pointing out that Lyft is currently offering a sign-up bonus.
Additional reporting by Kristen V. Brown