SAN FRANCISCO: Uber Technologies Inc [UBER.UL] has agreed to pay $20 million to settle a lawsuit brought by drivers nearly six years ago, according to court filings, resolving one of its many legal battles with drivers ahead of a hotly anticipated initial public offering this year.
Drivers for the ride-hailing company argued in the lawsuit they are employees, not independent contractors, as Uber has classified them, and therefore entitled to benefits and reimbursement for their expenses. The settlement amount is one-fifth of the $100 million settlement offer Uber proposed in 2016 to resolve the case, which U.S. District Judge Edward Chen at the time rejected as an inadequate amount.
The new settlement, which still must be approved by Chen, was filed in federal court in San Francisco late Monday night.
The lawsuit is central to a widely held debate over so-called gig-economy workers, the workforce assigned by technology platforms such as food-delivery and ride-hailing services. Gig-economy workers have often argued they should receive better pay and benefits, and be treated as employees.
A California Supreme Court ruling last year made it much more difficult for companies like Uber to argue that their drivers are independent contractors, which poses a threat to Uber’s business model.
The Uber settlement covers drivers in California and Massachusetts who have driven for Uber from August 2009 through February this year, according to the filing. The class is much smaller than in 2016 when the initial settlement offer was made.
Following Chen’s rejection of that offer, Uber won an appeals court ruling that upheld the company’s arbitration agreements as largely valid and enforceable. That forced most drivers into arbitration, and reduced the class size involved in the class-action lawsuit.