A surprising curveball has been thrown in the developing story of Uber’s class action lawsuit settlement regarding the employment status of their drivers. The class action claimed that Uber’s drivers should be classified as employees, and not independent contractors, for tax and expense purposes. Typically, an independent contractor will have to shoulder considerably more expenses that would otherwise be held by the company.
Lyft recently had a similar class action, in which it was able to successfully settle and maintain their drivers as independent contractors. Uber had reached a settlement that both sides agreed on and felt was favorable (according to an Uber spokesperson.) However, one of the judges on the case rejected the $100 million proposed settlement.
Typically when a judge rejects a settlement, it can be because that judge feels the settlement number is too low. However, this time the plaintiff’s party expressed worry that the rejection would cause Uber to be less willing to negotiate and reach an agreement. However, the Judge’s intention was to help the plaintiff class, as he felt that not only was the settlement amount tantamount to “low-balling,” but that an agreement’s inclusion to allow tipping on the Uber platform would not result in a “substantial increase in income” for drivers.
While some are worried that this development would allow Uber to cruise through this lawsuit with an unchanged business model, others feel the judge might be encouraging the suit to go through the full process so that a harsher anti-Uber ruling would be handed down.
Uber, the plaintiff, and others in the case may be disappointed, but the case is still active. We have yet to see if the plaintiff and Uber can reach a new settlement agreement before rulings. You can read more on this at Bloomberg.