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Uber Settles Two Class Action Lawsuits, Keeps Freelance Model Intact

GettyImages 481423966
GettyImages 481423966

Much to their chagrin, Uber drivers from California and Massachusetts are still free to drive for Uber and have a life, too.

The billion-dollar startup-turned-empire settled two lawsuits brought by drivers dissatisfied with the whole “drivers are independent contractors and not employees” situation, effectively allowing the company to maintain its core business model.

The full deets

The settlement demands that the company pay $100 million to the 385,000 drivers represented in the case, which will be paid in two payments of $84 million and $16 million if the company decides to go public, according to TechCrunch.

Uber also rolled out significant changes to their driver policies in an effort to improve driver satisfaction and integrate feedback, as detailed in a blog post from Uber CEO Travis Kalanick.

Most notably, Uber has agreed to create and fund drivers’ associations in the two states, which will allow drivers to voice their questions, complaints and concerns about the company during quarterly meetings.

“Six years ago when Uber first started in San Francisco, it was easy to communicate with the handful of drivers using the app,” writes Kalanick.

“That said, as Uber has grown—over 450,000 drivers use the app each month here in the U.S.—we haven’t always done a good job working with drivers…we’ve gotten a lot right—but certainly not everything. It’s time to change.”

Uber versus Uber drivers

The lawsuits, filed in 2013, were in response to what drivers felt was an unfair work and compensation structure, especially for those driving 40+ hours a week. As essentially full-time Uber workers, drivers felt that they should be considered employees and compensated and protected as such.

Uber basically responded with, “you’re missing the point” and defended the inherent flexibility as an integral part of its business model and mission, not to mention a work perk cherished by both the company and its drivers.

“In the U.S. almost 90 percent [of drivers] say they choose Uber because they want to be their own boss. 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,” said Kalanick.

But drivers feel that prioritizing workplace flexibility is just Uber’s way of finagling the rules to keep labor costs low. They view their freelancer status as a green light for Uber to continue sidestepping paying benefits and a fixed salary.

Drivers have also complained that certain authoritative aspects of the app bore a striking resemblance to an employer.

“The fact that drivers whose acceptance rates are too low could be shut out of the app for short periods of time, and that those with unacceptably high cancellation rates could eventually be deactivated from the platform, may suggest a level of control that is normally reserved for employees rather than contractors,” pointed out the New York Times’ Mike Isaac and Noam Scheiber.

Our take

Regardless of who’s right or wrong, the dispute has definitely unearthed a clear disconnect between the intent for the app and how it’s since been utilized by the public. What was meant to simplify the “side hustle” for some has instead taken on the role of a full-time gig for many, spotlighting issues that the app wasn’t designed to handle.

The willingness of Kalanick to update Uber without compromising the app’s integrity as a business will hopefully lead to a balance that both Uber and Uber drivers can get on board with.

 
 

Where do you stand in the contractors versus employees debate? Comment below or share your thoughts on Facebook.

Header image: Spencer Platt / Getty

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