Taxi hailing service Uber has paid $100 million to swerve a legal dispute which threatened to derail its business. The company has agreed to pay up to resolve a row over the employment status of its drivers in California and Massachusetts. It will hand $84 million to its drivers in return for them staying as independent contractors and therefore not entitled to employee benefits. Drivers could receive the rest if the company continues to expand and goes public.
Drivers value their independence — the freedom to push a button rather than punch a clock, to use Uber and Lyft simultaneously, to drive most of the week or for just a few hours
Uber CEO Travis Kalanick defends the deal
The dispute was seen as a serious threat to Uber which would have faced a steep increase in costs if its drivers had become employees. Under the deal, it will now have to give proper reasons for taking drivers off its books and will allow them to add tips to fares. CEO Travis Kalanick admitted that “we haven’t always done a good job working with drivers” but said with more than 450,000 now working for the company “it’s time to change”. Shannon Liss-Riordan, an attorney for drivers who brought the case, said it was decided to settle rather than to risk an expensive defeat in the courts.
If we had not settled, there were some serious risks that all we have fought for — and have achieved — could be taken away
Drivers’ attorney Shannon Liss-Riordan