BEACON TRANSCRIPT – On Thursday, a U.S. District Court in San Francisco rejected a settlement Uber Technologies has reached with thousands of its drivers following a couple of class-action lawsuits as being unfair and unreasonable for drivers.
Both sides were ordered to discuss the issue again in private and show up in court Sept. 15.
Uber agreed to review its stance, but said that the April settlement was “fair and reasonable” for both sides.
“We’re disappointed in this decision,”
a spokesperson for the ride-hailing company said Thursday.
About 385,000 Uber drivers in two states sued the company requesting to be treated as employees not contractors. This dilemma has led to numerous tensions between the taxi-app firm and its contractors since the company is not required to reimburse gas and other expenses if drivers are not employees.
Plaintiffs were also irked that the company single-handedly decided to deactivate the app from their phones with no prior notification. Under the new settlement, Uber agreed to pay $84 million as compensation to drivers and extra $16 million if the company decides to offer its stock to the public.
The company also agreed to revise some of the practices challenged in court. Uber chose to reach a settlement because it is a cheaper way of settling issues with its drivers than a lengthy lawsuit.
Additionally, a negative ruling can have a major impact on its valuation which currently stands at $68 billion. Not to mention the billion dollar loses the company will have to face if a court forces it to grant its contractors the employee status.
But dozens of drivers were unhappy with the settlement and brought Uber to court once more. Critics complained that the April deal deprives them of a fair trial and the opportunity of a jury to decide on their status.
Law experts noted that the promised $100 million is “minuscule” compared with what Uber drivers could have won in court. Plus, the settlement leaves room for uncertainty when it comes to the drivers’ legal status.
After the recent decision, Uber drivers might see nothing or very little money from Uber, experts said. The company could invoke an arbitration clause and decline to renegotiate the terms of the April deal. If that happens the firm can start a new trial which will involve a much smaller number of drivers. Experts believe that in that scenario only 8,000 drivers will be covered by a decision.
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