Uber has agreed to pay $20 million to settle a lawsuit accusing the ride-share service of classifying drivers as contractors to avoid paying them minimum wage and providing benefits. The settlement filed late Monday noted that parties involved in the six-year-old suit still have a "bona fide" dispute regarding whether any specific amount of wages are due to drivers.
The proposed deal requires the approval of a federal judge presiding over the case. The case filed in August 2013 covers Uber drivers in California and Massachusetts who provided rides for passengers any time from then to February 28 of this year who were not bound by an arbitration clause.
An estimated 13,600 drivers were affected. Uber faces a slew of arbitration claims by drivers not represented by the class-action suit. "Uber has changed a lot since 2013," the San Francisco-based company said in a statement, noting it has added a driver rewards program as well as an option to let riders tip drivers.
"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." The settlement also called for Uber to make changes including no longer deactivating drivers' accounts for accepting few rides and creating a formal appeals process for drivers dropped from the service.
The deal does not resolve the big question of whether "gig economy" workers such as Uber drivers are independent contractors or should be considered by law to be employees with rights regarding pay, gratuities and benefits. The ridesharing behemoth set to launch a stock offering soon is aiming beyond sharing car rides to becoming the "Amazon of transportation" in a future where people share instead of owning vehicles.
Under Uber's plans, commuters could ride an e-scooter to a transit station, take a train then grab an e-bike, ride share or e-scooter at the arrival station to complete a journey all done using an Uber smartphone app. Uber is steering toward a keenly anticipated stock market debut that will follow an initial public offering of shares by US rival Lyft.