Uber will pay at least $84 million to settle two class-action lawsuits in California and Massachusetts initiated by drivers.
Both cases centered on whether drivers using Uber's app should be classified as independent contractors or employees. As part of the settlement, both sides have agreed that drivers will remain independent contractors, not employees. In addition to the $84 million, Uber may have to pay out an additional $16 million if the company goes public and its valuation increases 1.5 times within the first year of its IPO.
Under the settlement, Uber will also provide drivers with more information about their individual rating, and be more transparent about its policy for deactivating drivers in these states. Finally, Uber has agreed to create and fund a "driver's association" in both states, and meet with them quarterly to discuss any issues.
"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 and co-founder Travis Kalanick said in a statement. "That's why we are so pleased that this settlement recognizes that drivers should remain as independent contractors, not employees."
Obviously, not all drivers feel the same. Drivers involved in the suits argued that they are Uber's employees and should be reimbursed for expenses like gas, fees, and tolls. Uber, meanwhile, has consistently said that it's a technology company, providing a service to drivers and riders, and not a taxi company that employs drivers directly.
At this point, more than 450,000 drivers use the Uber app each month in the US. alone. "Uber is a new way of working: it's about people having the freedom to start and stop work when they want, at the push of a button," Kalanick wrote.
Meanwhile, word has it Uber is introducing a new way to reduce driver fraud in China — facial recognition. According to a Quartz report, Uber will ask drivers to snap a selfie when they sign up, then "run periodic facial recognition tests to make sure that the person behind the wheel is the same person who created the account."