Uber drivers will remain classified as independent
contractors per a settlement of two class-action lawsuits in California and
Massachusetts, according to the company.
The settlement prevents reclassification
of Uber drivers as W-2 employees, which would have dealt a severe blow to
the company's business model. The categorization enables Uber to avoid standard
employee costs, including benefits and such expenses as gas.
Under the settlement, which still requires court approval,
Uber will pay $84 million to the plaintiffs. It will pay another $16 million if
it both goes public and within a year of the initial public offering increases
its valuation 150 percent from December 2015 levels.
Uber also will provide drivers more information regarding
their ratings and on April 21 published a policy to better explain why Uber
deactivates drivers, CEO Travis Kalanick wrote in blog post. It states that
Uber permanently deactivates drivers who are violent, drive while intoxicated
or refuse rides based on race or sexual orientation. It allows drivers a chance
to improve, however, for less serious infractions, such as a car with an
unpleasant odor.
As part of the settlement, Uber has agreed not
to deactivate drivers for regularly declining trips while logged in. "If
too many drivers decline the rides we send their way, it undermines the
reliability of the service for riders," Kalanick said in his post.
"But we understand that drivers need breaks and sometimes things come up; maybe
a kid has gotten sick at school."