The rideshare company Uber recently settled a major lawsuit that disputed whether or not the company was improperly classifying its drivers as 1099 independent contractors to cut back on payroll and other expenses.
About the Case
Uber has agreed to pay $20 million to settle the class-action lawsuit that was brought against the company in 2013. In 2016, Uber offered to settle the case for $100 million but a judge rejected the company’s offer.
According to the lawsuit, Uber classifies its drivers as independent contractors so that they don’t have to pay a minimum wage or provide them with benefits. Although the case was granted class-action status, an appeals court decided that Uber’s arbitration agreements were valid and enforceable, which dropped the number of eligible plaintiff’s in the class to around 13,600.
Who Is Eligible for Payment?
Uber drivers who worked between August 16, 2009, and February 28, 2019, in California or Massachusetts are eligible for a payout from the settlement. Drivers also can’t be bound by Uber’s arbitration clause to claim payment.
What Are the Consequences of the Settlement?
Uber has agreed to draft a detailed deactivation policy, an appeals process for deactivation decisions, and new courses for drivers. According to a spokesperson from the company, “Uber has changed a lot since 2013” and is striving to “improve the quality, security, and dignity of independent work.”
Although the plaintiffs in the lawsuit will be compensated under the settlement, Uber drivers covered by arbitration clauses will have to pursue individual claims in arbitration to seek payment. Similar cases regarding employment classification are pending against major companies that use this type of business model, such as Lyft, GrubHub, Amazon, and Postmates.
Are you an employee who has been wrongfully terminated or misclassified by your employer? If so, give Rod Smith Law PLLC a call at (304) 553-0337 to request your free consultation with one of our experienced lawyers.