About 385,000 drivers in California and Massachusetts will benefit from this windfall, though they will not achieve their original goal of gaining employee status. Uber will pay an initial $84 million, followed by an additional $16 million if the company goes public and sees its value increase by 50 percent within a year.
Today’s so-called sharing economy, in which apps have made it easier for to find peer-to-peer services from Airbnb to doggy daycare, has created a host of issues for labor. Uber, for example, classifies its employees as independent contractors so that it doesn’t have to pay for their car insurance or Social Security, as well as other benefits such as workers’ compensation, sick days, or the right to form unions.
What Uber drivers do get is the flexibility to choose hours and determine when, where, and how much they want to work. Flexibility is one of the things Uber drivers most prize about their jobs, chief executive office Travis Kalanick wrote in a Thursday statement.
Mr. Kalanick cites Uber drivers who told the court that they preferred the flexibility of the independent contractor designation to the potential security of being labeled an employee.
“I wouldn’t even want to be an Uber employee,” one unnamed driver testified. “I would quit if they tried to make me an employee, because I value my freedom as an independent contractor too much.”
Many others, however, have shown that they are more than interested in obtaining employee status.
As part of the settlement, Uber will change policies that caused complaint among its independent contractors, but many say that it is still not enough.
Whereas Uber was previously able to deactivate driver accounts without warning, a new policy states it will issue warnings and justifications prior to deactivating driver accounts. The company published its deactivation policy for the first time on Thursday.
With a nod toward the flexibility Kalanick touts, Uber will also no longer penalize drivers who frequently refuse rides. Kalanick acknowledged that although frequently declining rides “undermines the reliability of the service for riders … we understand that drivers need breaks, and sometimes things come up – maybe a kid has gotten sick at school.”