Uber to pay up to $100 million to settle class-action lawsuits

Uber to pay up to $100 million to settle class-action lawsuits

Uber Inc. has agreed to give up to $100 million to its drivers and implement a number of significant policy changes to settle two class-action lawsuits, the lawyer representing Uber drivers announced.

Under the settlement terms of the two suits, Uber must pay $84 million to 385,000 drivers in California and Massachusetts. The company also agreed to pay an amount of another $16 million if its valuation increases one and a half times from its Dec. 2015 valuation with a year.

Shannon Liss-Riordan, the lawyer representing the drivers, said, “We are very pleased to announce that Uber has agreed to a historic settlement of the claims we have brought in California and Massachusetts for misclassifying its drivers as independent contractors.”

While the drivers will receive the money and be able to get more information about things like their quality rating, the company will keep categorizing the drivers as independent contractors, rather than employees.

The plaintiffs had argued that as Uber drivers, they should be classified as employees, and entitled to the benefits stipulated under the states' labor laws. But by being allowed to continue classifying drivers as independent contractors, Uber doesn't have to stump up the cost of these perks, driving down its operating costs and validating its business model.

The two lawsuits were brought in California and Massachusetts, but their effects will likely be felt across the nation, as well as by other ride-hailing companies, such as Lyft.