Uber settles driver classification lawsuit News
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Uber settles driver classification lawsuit

Uber reached a $20 million preliminary settlement agreement Monday in a class action lawsuit over how the company classifies its drivers.

The case involved drivers from California and Massachusetts who disagreed with Uber’s policy of classifying its drivers as independent contractors. Classifying drivers as contractors lowers costs for Uber by avoiding employee benefits like minimum wage and overtime.

In addition to the cash settlement, Uber agreed to change its business practices in the two states. Moving forward, Uber will no longer deactivate driver’s accounts for low usage rates. The company will post a comprehensive policy online and will provide notice before a driver’s account is deactivated. When drivers are deactivated, the company will now allow for a formal appeal process in certain situations. Uber will also provide for quality courses for drivers who have their account deactivated and qualify.

This settlement is significantly different from the original 2016 settlement, in which Uber had agreed to pay $100 million to 385,000 drivers. A federal judge threw out that agreement because the dollar amount was too low. Since then, the US Court of Appeals for the Ninth Circuit reduced the size of the class to 13,600 drivers because Uber’s arbitration clause prohibits class actions. The 13,600 drivers will receive about 37 cents per mile driven for Uber.

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