Ridesharing Giant Uber Moves to Settle Worker Misclassification Claims
Prior to what turned out to be a disappointing IPO for investors, ridesharing giant Uber Technologies told the federal government that it was moving to settle thousands of claims by drivers that they should be compensated as employees rather than independent subcontractors.
Worker misclassification spans many industries and has been called a “scourge” in construction. Many workers are paid by the piece when they should, under law, be compensated as employees entitled to benefits like accident insurance and a retirement.
There are, of course, many legitimate uses of contract labor in construction and other industries. The problem arises when law-abiding employers are undercut and underbid by those companies that use the practice to cheat.
Perhaps obviously, what happens with the employment claims against Uber could have wide-ranging ramifications for the way this is dealt with in other industries.
In a document filed with the Securities & Exchange Commission, Uber said the independent contractor status of its drivers “is currently being challenged in courts and by government agencies in the United States and abroad.” While the company continues to insist that its drivers are independent contractors, its leadership says they’ve reached agreements that would “resolve the classification claims” of tens of thousands of its drivers in the United States.
The company anticipates paying out claims and attorneys’ fees of between $146 million to $170 million for the matter. The preliminary settlement approval hearing will be in July.
“We believe that Drivers are independent contractors because, among other things, they can choose whether, when, and where to provide services on our platform, are free to provide services on our competitors’ platforms, and provide a vehicle to perform services on our platform,” Uber said.
“Nevertheless, we may not be successful in defending the independent contractor status of Drivers in some or all jurisdictions,” the company said in explaining why they are settling with some of these drivers. “Furthermore, the costs associated with defending, settling, or resolving pending and future lawsuits (including demands for arbitration) relating to the independent contractor status of Drivers could be material to our business.”
You can check out Uber’s full filing with the SEC right here.