Uber will pay 20 million dollars to drivers, what an expert considers "a victory for Uber"

March 13, 2019, 01:47 GMT / Update March 13, 2019, 02:53 GMT

By Cyrus Farivar

Uber will pay $ 20 million to its drivers in California and Massachusetts to settle a class action that raises the issue of the company's responsibility to its workers.

Uber lawyers testified in court on Tuesday that they had accepted a settlement with thousands of drivers. US District Judge Edward Chen is about to hear the March 21 motion for a preliminary ruling in the San Francisco courtroom. In the end, he will decide if the settlement can go forward.

The agreement will not put an end to the long and thorny question of whether Uber's drivers are employees or contractors, but the settlement will likely resolve the litigation that has forced this issue through the courts.

Many market economy companies, including Uber, Lyft, DoorDash, and Instacart, save millions of dollars a year by not ranking drivers and delivery men – the backbone of their workforce – as a business. # 39; employees.

Companies do not pay health insurance, retirement, unemployment or other benefits expected by many traditional employees. Ulber uses the term "driver partners" to refer to most of his workers.

The lawsuit, O'Connor c. Uber, has been pending before the Federal Court since it was introduced in August 2013 and argued that thousands of drivers had been wrongly classified as subcontractors and had been wrongly denied reimbursement of business expenses.

The new regulation concerns approximately 11,000 drivers in California and 2,600 in Massachusetts, who will collectively receive $ 20 million.

According to a file filed Monday by the court, the "average net settlement share" will be $ 2,206 per driver, legal fees in effect, more than five times the amount proposed three years earlier.

"According to this regulation, we estimate that these drivers will receive approximately 37 cents per mile for the kilometers driven for Uber (based on the exact claim rate)," said Shannon Liss-Riordan, the plaintiffs' lead counsel, in an email to NBC News on Tuesday.

"It's a substantial recovery, since the IRS's refund rate has varied between 50 and 58 cents per mile."

Drivers not covered by this agreement who wish to recover money will have to make a private claim through an arbitration, a quasi-legal private process that is criticized by groups of workers to favor businesses through report to individuals.

Noah Edwardsen, a spokesman for Uber, declined to answer NBC News's specific questions on the settlement.

"Uber has changed a lot since 2013," said the company in a statement. "We have further improved the driver experience through enhancements such as tipping into the app, a redesigned driver app, an innovative injury protection insurance option and new privacy programs." rewards like Uber Pro. We are pleased to reach a settlement and we will continue to work tirelessly to improve the quality, safety and dignity of self-employment. "

Both parties almost reached a regulation in 2016 that covered many more drivers. The case was ultimately appealed to the US Circuit's 9th Circuit Court of Appeals in 2017, when it was finally transferred to the lower district court.

Liss-Riordan said the settlement did not end the legal battle surrounding workers in the high street economy.

"This is not the end of the driver ranking issue," said Liss-Riordan. "We continue to pursue numerous cases against large-economy (and other) companies that mistakenly classify their workers as independent contractors, in order to save labor costs." 39 work and transfer the risks and expenses associated with running a business to low-wage workers. "

"Especially a victory for Uber"

Legal experts say Uber's impending initial public offer has probably lobbied to settle the case.

Uber and his main rival, Lyft, are both expected to go public later this year. In a document filed with the Securities and Exchange Commission released earlier this month, Lyft said that there could be more "regulatory controls" on technology companies that have so many "entrepreneurs" independent "and that the new laws could be" unfavorable to our activities ".

According to Veena Dubal, a professor of labor law at the University of California in Hastings, San Francisco, Uber is "incited to evade potentially decisive judicial decisions."

But, she observed, Uber managed to avoid what could have been an additional financial loss.

"Since the virtual settlement, three years ago, the higher courts have seriously undermined the class of drivers," Dubal said in an email.

The class has grown from 400,000 drivers to nearly 14,000.

"The value of the settlement itself is really hard to evaluate," said Dubal. "Of course, if the pilots won at the trial, especially with regard to the reimbursement fees, they would have the potential to do a lot more."

Michael LeRoy, a professor of labor law at the University of Illinois, said that it was a relatively easy way for the company to end a long trial that could have lasted years. In addition, at the end, $ 20 million represents a very small amount for a company whose estimated value is about $ 120 billion.

"I see this as a victory for Uber," LeRoy said in an email. "The monetary settlement represents only a small fraction of their potential liability and their business model of using drivers as independent contractors remains intact."