SAN FRANCISCO — Uber has settled a pair of major class-action lawsuits in California and Massachusetts that will keep its drivers independent contractors instead of employees, the company announced Thursday night.
The settlement is a major step toward the ride-hailing company keeping its current thriving business model that has been threatened as drivers have sought a more secure status and more bargaining rights.
Under the deal, Uber will pay $84 million to the plaintiffs in the two states and another $16 million if the company goes public and meets certain goals.
The San Francisco company also agreed to improve its systems for communicating with drivers about their ratings and why they are terminated, and to help start drivers’ associations in both states.
Classifying its workers as employees could have raised Uber’s operating expenses significantly and would go against its business model and identity. It also would have allowed them to join a labor union. Uber’s selling points for drivers are based on ideas of freedom and autonomy.
“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,” Uber CEO Travis Kalanick said in a company blog post announcing the settlement.
Federal law does not extend collective bargaining rights to independent contractors such as architects, masseuses or workers dispatched through mobile applications such as Uber and Lyft.
The settlement, which involved 385,000 drivers in in the two cases, was filed in a U.S. District Court in San Francisco. A federal judge must sign off on the deal.
Attorneys for the plaintiffs could not immediately be reached for comment.
