Uber agrees to pay drivers $20 million to settle independent contractor lawsuit

At a time when the gig economy is under heavy scrutiny around its practices of classifying workers as 1099 independent contractors, IPO-bound Uber has officially settled a six-year-long case regarding this exact topic.

Today, Uber agreed to pay $20 million to settle the class-action lawsuit, brought forth by Douglas O’Connor and Thomas Colopy way back in 2013. This comes after a judge rejected Uber’s offer to settle for $100 million back in 2016.

The suit claimed Uber classified its drivers as contractors to avoid paying them a minimum wage and providing benefits. Since its original filing, the suit was granted class-action status to represent hundreds of thousands of drivers in California and Massachusetts. That victory for drivers was short-lived when an appeals court ruled Uber’s arbitration agreements were valid and enforceable. That decision reduced the number of drivers in the class to about 13,600.

Those eligible for a payout from the settlement include those who drove for Uber between August 16, 2009, and February 28, 2019, in California or Massachusetts. They must also not be bound by Uber’s arbitration clause.

In addition to the $20 million settlement, Uber has agreed to implement a comprehensive written deactivation policy, a formal appeals process for certain deactivation decisions and quality courses for drivers.

“Uber has changed a lot since 2013. We have made the driver experience even better through improvements like in-app tipping, a redesigned driver app and new rewards programs like Uber Pro,” an Uber spokesperson told TechCrunch. “We’re pleased to reach a settlement on this matter and we’ll continue working hard to improve the quality, security and dignity of independent work.”

But for Shannon Liss-Riordan, the lawyer for the plaintiffs, this is not the end of the issue. While Liss-Riordan said she’s pleased to have reached a settlement, it’s just for a small number of drivers.

“As a result, while we were able to pick up the pieces and achieve this substantial settlement for the drivers not covered by arbitration clauses, other drivers would need to pursue their claims in individual arbitration if they wanted to attempt to recover anything on their claims,” she said in a statement to TechCrunch.

Meanwhile, she’s actively pursuing other cases against gig economy companies that classify their workers as independent contractors. 

“We continue to have cases pending against Amazon, GrubHub, Lyft, DoorDash, Postmates, Handy and many others that are exploiting their workers through this business model,” she said. “Because of arbitration clauses, we are fighting many battles to overcome arbitration, and at the same time, we are also pursuing mass arbitrations against many of these companies.”

The case is O’Connor v. Uber, 13-cv-03826 in the U.S. District Court for the Northern District of California (San Francisco).