Uber is reportedly on track to go public in the first quarter of next year, and on the way to that, it’s sewing up some loose ends.
TechCrunch has learned that Uber has offered a tentative agreement to pay 11 cents for every mile traveled by Uber (including adjacent services like Uber Eats) to drivers who have been in individual arbitration with the company over their job classification. The drivers were pursuing individual arbitration after an appeals court ruled in September that they could not combine their cases in a class action lawsuit.
Uber has declined to comment for this story, and one of the firms representing the drivers, Lichten & Liss-Riordan, has not yet responded to our request for comment.
In a case that now stretches back years and covers nine states, some 160,000 drivers had been seeking to be classified as employees rather than independent contractors, in part to obtain compensation for expenses related to driving the business, such as used gasoline. and the vehicle. maintenance.
Another big complaint in the case involved advice: Drivers said Uber would not allow them to take or save advice from passengers. (The claim preceded June 2017, when Uber formally introduced tips into its app, earning an additional $ 600 million for drivers in one year.)
Uber’s payout of 11 cents per mile for all travel miles that were made for Uber’s bypasses that address those specific details. In particular, drivers who accept the settlement agreement documents to release all claims against Uber related to misclassification of employees.
The agreement is tentative depending on a sufficient number of drivers signing the agreement (we don’t know what the minimum would be), among other factors, and it could take up to six months for payments to reach the drivers.
On the one hand, this is a good result in what was a difficult situation to litigate the drivers. A class action lawsuit, combining multiple people in a single case, would have gained economies of scale in terms of legal costs, and that could have meant a stronger recovery payment for the group.
But with the appeals judges rejecting that possibility, individual drivers would have been left to pursue their own cases against the company. That’s an expensive and time-consuming process and you may not have seen that many plaintiffs willing to fight.
It may have been unpleasant for Uber too. With the company preparing for a public listing and all the scrutiny that comes with it, drawing a line in these cases with a settlement is a better outcome than multi-year arbitration cases.
It is also an important step for Uber to repair its image with current and potential drivers.
The company suffered a major crisis last year that highlighted the company’s questionable management and bad culture in regards to female employees, treatment of drivers, interaction with regulators and more.
(In fact, the tip was introduced as part of the company’s broader efforts to repair its business and image among drivers, passengers and employees. It also included the appointment of a new CEO.)
Having a loyal and growing driver base is essential for Uber to expand its business, and this deal is a signal to drivers that Uber is trying to do for them.
However, it appears that the bargaining power here may have been more on Uber’s side.
Uber, valued at $ 72 billion as of its last funding and potentially as high as $ 120 billion in an IPO, is one of the world’s largest private technology companies. The 11 cents per mile it offers as a settlement is estimated to be just one-third of what a driver could have recovered for just one of the claims, expense reimbursement, had he followed arbitration rather than opted for the settlement.
Obtaining rights for the growing number of contract workers in the labor market has been one of the most controversial aspects of the boom in “gig economy” companies. It will be interesting to see how and if more of these types of cases come to light, and if regulators start to intervene, in cases where employers do not.