Uber’s Settlement To Keep Drivers As Contractors Could Save It As Much As $1 Billion

Uber’s Settlement To Keep Drivers As Contractors Could Save It As Much As $1 Billion

Last month, Uber settled two class-action lawsuits for $US84 million ($114.2 million) to keep its California and Massachusetts drivers as contractors. Now, court papers reveal that the ride-hailing company could owe those workers as much as $US750 million ($1 billion) more if they were classified as employees. Reuters reports that a San Francisco federal judge ordered the release of compensation figures that would apply if Uber workers were classified as employees. The gist is that if Uber were an employer, it would be expected to pay reimbursement for expenses — like upkeep of cars and petrol.

Attorneys working on behalf of drivers in California and Massachusetts reckon that those reimbursements — along with a claim to recover tips — would require Uber to stump up $US850 million ($1.15 billion) to cover payments it hasn’t made over the past seven years. Even Uber’s attorneys reckon the drivers would be entitled to $US430 million ($584.6 million). (The disparity is apparently due largely to differences in mileage rates, says Reuters.)

Instead, Uber has settled out of court for $US84 million ($114.2 million), with a further $US16 million ($21.7 million) potentially due if it goes public. That totals to about 12 per cent of the sum that the drivers’ attorneys claim they’d be entitled to. As we’ve explained in the past, ensuring that drivers remain as contractors and not employees is totally worth it for Uber, and these court documents demonstrate why. Despite its huge success, $US750 million ($1 billion) is still a sizeable chunk of change.

Uber’s counter point, which its CEO Travis Kalanick often makes, is that “drivers value their independence — the freedom to… drive most of the week or for just a few hours”. But one suspects that they’d value some cold, hard cash even more.

It’s worth noting that the settlement is still subject to legal approval. These figures may go some way influencing the outcome.


Image: AP