The American transporter has agreed to pay $100 million to driving partners for settling a class-action lawsuit
Uber technologies has taken a significant measure to help clear legal uncertainties regarding its business model, deciding to pay a sum up to $100 million to driving partners in Massachusetts and California to settle a class-action litigation.
The California litigation was amongst the largest legal threats facing the American application based cab service provider in the United States and had been as per schedule be presented before the jury trial in June. The settlement leads to the removal of a serious legal threat to the disruptive business model of the US organization, which has faced legal action and regulatory scrutiny in numerous regions of the globe.
The agreement, which should be approved by a judge, permits the transporter to maintain the status of its driving partners as independent contractors- a win for Uber. Resolving legal and regulatory challenges is an important task for the transporter before its final IPO, which could yet be many years away.
The taxi service provider has already received over a sum of $10 billion to take its valuation to $62.5 billion, turning it into the most valuable Silicon Valley based start-up. At issue in the 2 class-action suits in Massachusetts as well as California was to determine whether the transporter had misclassified its cab drivers as independent contractors rather than workers, a status which affords protections like an hourly wage rate and repayment of expenses.
Under the agreement, the company will give concessions to driving partners, including permitting them to show signs in their automobiles requesting for tips and backing the establishment of a “drivers association” that will inform their concerns to the organization.
Uber CEO and co-founder Travis Kalanick stated he was “pleased” the agreement recognized driving partners as independent contractors but conceded the policies of the organization had failed to always keep up with its growth.
Travis posted in his blog that “As Uber has grown — over 450,000 drivers use the app each month here in the US — we haven’t always done a good job working with drivers,”. For addressing that issue, and under the agreement, the transporter for the first time posted its policies discussing in detail when driving partners can be kicked or deactivated off the application.
Uber will also formulate an appeals procedure for drivers who got deactivated. The agreement, largest anywhere across the globe for a cab service provider, raises some legal questions. Courts rejected a similar settlement between Lyft and its own drivers in recent times after drivers raised an objection.
Some driving partners of Uber stated the settlement had disappointed them and they expect that the legal case will be presented before the court. Under the conditions of the settlement, Travis’ organization will pay a sum of $84 million to driving partners with an extra $16 million to be spent if the value of the organization rises after an initial public offering.