Uber has just settled two class action lawsuits in California and Massachusetts brought by drivers. Drivers sought classification as employees, overtime pay and transparency regarding tips.
What does the settlement mean for the drivers and–more importantly–the law of independent contractors?
Very little. First, federal court judges in both jurisdictions must approve the $100 million settlement. Hearings will be held: This is not a rubber stamp situation by any means. The 385,000 drivers will receive little compensation to drop their claim to be employees. Judges may reject the settlement outright or pressure Uber into a much higher amount. Earlier this month, a federal judge in California rejected rival ride service Lyft’s $12.25 million dollar settlement with drivers as unfair, stating the drivers were “short-changed” by the deal.
This private action will not resolve or carry any weight on the issue of whether Uber drivers are employees. The IRS could audit Uber and make a determination on whether drivers are employees or independent contractors. The National Labor Relations Board (NLRB) is investigating Uber’s labor practices. The Teamsters are trying to organize the drivers and that would also bring the question of employee classification to the NLRB. Finally, both MA and CA have laws favoring the employee relationship over the narrowly defined independent contractor, which creates an unfriendly environment for Uber.
Many people are watching Uber as one of the largest companies to use the gig economy–can it last? Stay tuned.