USA: Uber Settlement Designates Drivers As Contractors

ubercar42316_0First the good news: Uber the ‘ride sharing’ company has announced this week it had settled two class action lawsuits iand agreed to pay up to $100 million to workers in California and Massachusetts. The bad news: Uber gets to continue to classify its drivers as ‘independent contractors’

USA Today described the settlement which affects 385,000 workers in California and Massachusetts as “a big win for a company whose business model depends on keeping costs low by merely serving as a conduit between drivers and riders, rather than being an employer.”

As Uber drivers are classified as ‘independent contractors (described in the USA as 1099 workers) they do not qualify for health benefits, Social Security, unemployment or injury compensation, sick pay, holidays and holiday pay – or any other safety net benefits.”

Former US Labour Secretary Robert Reich says the designation means Uber drivers are “outside the labour laws – the most significant legal trend in the American workforce – contributing directly to low pay, irregular hours, and job insecurity”.

What makes them “independent contractors” is that Uber and other ‘ride’ companies say they work for say they are independent contractors who get their work via the Uber platform.  Companies such as Uber do no have any costs  of having full-time employees.

The settlement includes $84 million to the plaintiffs, and allows drivers to put signs in their cars saying ‘tips are not included’ in the price of a journey and would be appreciated”. There will be a second payment of $16 million if Uber goes public and the company valuation increases one and a half times from our December 2015 financing valuation within the first year of an IPO.

The Wall Street Journal described the amount as “a small concession relative to the larger triumph of preserving the high-margin business of connecting passengers to freelance drivers.”

However, as the Washington Post noted, “The settlement does not set any legal precedent and the company still faces other suits that remain unresolved.”

511kiLg3xQL._SX327_BO1,204,203,200_Earlier his month, Uber also released its first-ever transparency report which showed “that in the second half of 2015 alone, the ride-sharing app handed over information affecting more than 12 million riders and drivers to a number of U.S. regulators, and shared data about more than 400 users with federal and state law enforcement agencies.”

The Uberization of the economy ploughs on, wiping out decent jobs and underming employment rights. This issue will be a major issue for trade unions in the USA, the EU and the UK.

For more on Uberization and the digital revolution click on the book cover.

For more on the digital economy and its effect on trade unions click on the following links:

Trade Unions And The Coming Digital Revolution

Labour Needs To Get To Grips With The Digital Economy

Big Union Row Over Airbandb

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