Uber has agreed to shell out at as much as $100 million to drivers in California and Massachusetts to settle a class-action lawsuit. For many startups, a payout of that size would be a big setback. But some seasoned Uber drivers consider it a victory for the ride-hailing company.
Ezra Dubroff, an Uber driver in Los Angeles since November 2013, had hoped the case would go to trial and set a legal precedent. He and other drivers say the settlement folded on the suit's central claim—that Uber drivers should be classified as employees, not independent contractors, entitled to such protections as a minimum wage, Social Security and health benefits.
Instead, he says, the deal is being interpreted as a big win for Uber—a contention widely shared by analysts who say the outcome is a significant boost for the company and the so-called gig economy. In the court of public opinion, Dubroff says, "People think this is done with and that Uber is right."
Shannon Liss-Riordan, who represented about 385,000 drivers, defends the settlement as "extremely significant" and says she could have lost at trial in Uber's hometown of San Francisco. And even had she won, the company almost certainly would have appealed. "I would have loved to take this case to trial," she says. "Given the risks we were facing and what we achieved, that would not have been responsible."
Drivers have already filed objections to the settlement, which the judge still needs to approve.
Not all drivers are as disappointed as Dubroff. John Domingo, who estimates that he's driven more than 70,000 miles for Uber, believes an outright victory could have killed Uber's business if the company had been forced to convert its drivers into employees. But Domingo says, "The attorney kind of sold out."
Some drivers say Liss-Riordan should have held out for more money, which they consider a trifling sum for a company recently valued at $62.5 billion. Uber has agreed to pay an initial $84 million, which could rise to $100 million if the company goes public and reaches a valuation of at least $90 billion or so. How much each driver receives will depend, in part, on how many ask for a cut. If all do, based on a $100-million payout, Liss-Riordan estimates they'll get $1,950 apiece. (As much as a quarter of the settlement could be swallowed up by legal fees.)
Kendrick Lewallen signed up for Uber back in June of 2014. If he winds up receiving less than $2,000, he says, "Uber basically won this lawsuit. If it's that low, I think it's kind of ridiculous because we've been working so hard and for so long. We deserve a little bit more."
Liss-Riordan says the most active drivers could receive more than $8,000. But to get such a sum, they would have had to opt out of an arbitration clause recently added to their contracts. The clause excludes drivers from participating in class-action lawsuits.
The drivers won several non-monetary concessions from Uber. Chief among them: The company will no longer ban them for failing to accept new fares—what the company calls deactivation.
"As we’ve grown we’ve gotten a lot right—but certainly not everything," Uber Chief Executive Officer Travis Kalanick wrote in a blog post. "This new deactivation policy is an important step forward when it comes to working with drivers. But there’s more to do, which is why I’m excited about some other improvements we have planned for the not too distant future. Stay tuned."
As part of the settlement, drivers also will be allowed to form an association. And Uber acknowledged it allows tipping, though gratuities aren't included in the mobile application.
Still, according to Harry Campbell, who runs a popular blog for Uber drivers, the settlement "really is a big win for Uber. Obviously drivers looking to be reclassified as employees are the losers."
—With Kartikay Mehrotra