A proposed $100 million settlement between Uber and its California and Massachusetts drivers, with $84 million to have been paid out initially and $16 million more to have been distributed if and when Uber went public, was rejected yesterday by a federal judge, further unsettling the question of whether Uber drivers are contractors or employees entitled to benefits conferred by that status. The New York Times reported the decision as a victory for drivers and a blow to Uber, who if forced to reclassify its drivers in California alone might have to pay as much as $209 million according to one estimate.
The settlement, arrived at in April, would have paid off drivers to defer the question of their employee status and give up on certain aspects of the issue. Many drivers weren't happy with that or the payout, and became pointedly critical of plaintiffs' attorney, Shannon Liss-Riordan, with the key plaintiff in the case turning on her and removing himself from the case, which bears his name, as the deal was "not in my interest or in the interest of any Uber driver.”
In Federal District Court for Northern California, Judge Edward Chen agreed, ruling the settlement “not fair, adequate, and reasonable,” denying it on the grounds that the $100 million represented too small a fraction of the potential verdict.
Most of the settlement money, the AP explains, would have gone to settle claims about Uber withholding money from drivers it owed them to pay for overtime, phone usage, and the like. Judge Chen saw the settlement as keeping drivers from pursuing further claims on employment issues or receiving further settlements on them.
What would the roughly 385,000 Uber drivers affected by the suit according to CNET have actually received under the terms of the settlement? $10 to $1,950 for California drivers and $12 to $979 for Massachusetts drivers. If the case had gone to trial and drivers had won, however, the haul might have been as much as $854, drivers' attorneys said.
Interestingly, though Uber has raised investments at a valuation of $62.5 billion, Chen is skeptical that the company will ever actually IPO, and assumes that the initial $84 million payout would be the end of the ride for drivers.
“The settlement, mutually agreed by both sides, was fair and reasonable,” Uber spokesperson Matt Kallman said in a statement. “We’re disappointed in this decision and are taking a look at our options.”
Liss-Riordan was also unhappy with the decision, she said, “but I understand and I have heard [Judge Chen]." She said in a statement that a revised settlement might be reached, but if not, "as I've said before, I will take the case to trial and fight my hardest for the Uber drivers." If that's the case, "it now seems very likely that the scope of this case may be drastically reduced to about 8,000 drivers because of Uber's arbitration clause," she added.
Liss-Riordan had previously justified taking the settlement suggesting that the larger question about drivers being employees might be settled with a different case in a different state where a jury might be less inclined to side with Uber, rather than the company's home state of California.
Previously: Uber Paying Off Drivers To The Tune Of $100M So They Can Keep Them As Contractors
Key Plaintiff Objects To $100M Uber Class Action Settlement As Drivers Criticize Lead Lawyer