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Uber Will Pay $100 Million To Settle Suits With Drivers Seeking Employee Status (latimes.com) 83

An anonymous reader writes: Two lawsuits posing a threat to Uber's on-demand business model have been settled. Uber has agreed to pay up to $100 million to drivers who sought to be classified as employees of the company. The initial sum paid will be $84 million, which will settle cases in California and Massachusetts to some 385,000 drivers. If the company goes public or gets purchased, Uber said it will pay drivers an additional $16 million. The company is currently valued at $62.5 billion. In addition, new policy changes will force the company to no longer be able to deactivate drivers' accounts at will. They will also stop deactivating drivers who turn down rides frequently. Appeal panels will be created to help drivers form an association so they can contest terminations. The last policy change requires Uber to clearly inform riders that tips are not included in Uber's fares. Drivers will now be able to solicit tips from passengers. "If we chose not to settle this case, we faced risks," plaintiff attorney Liss-Riordan said in a prepared statement. "We faced the risk that a jury in San Francisco (where Uber is everywhere and quite popular) may not side with the drivers over Uber." The settlement still needs to be approved by Judge Edward Chen of the District Court of Northern California, which will probably be a months-long process. The company seems to be waist-deep in legal trouble lately. Two weeks ago, Uber agreed to a settlement of $10 million for misleading advertising about the quality of its background checks for drivers. One week prior, it was reported the CEO of Uber will go to court over price fixing claims in New York.
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Uber Will Pay $100 Million To Settle Suits With Drivers Seeking Employee Status

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  • Ignore laws, write off settlements as cost of doing business compared to revenue.

    Sounds about business as usual.

    • I don't see how this settlement will work. So, current drivers get some cash, but what about new drivers? Can't they sign up now, wait a couple of years or so and then sue?
      • They could sue but likely not for this. The employment structure for the company is changed so new drivers would likely not fall under the same conditions or circumstances as those who are settling. The cash existing covered drivers will get covers past grievances that should no longer exist.

      • That would be tricky.

        The problem is that Uber has a lot of control over what it's drivers do because it deactivates (ie: fires) them for shit like refusing a fare or pissing management off. That makes it very tricky for them to get the IRS tests [irs.gov] for employee or contractor to say contractor, which means that they are on the hook for a variety of things including the employer half of their driver's self-employment taxes. Since all 50 states have their own employee/contractor rules, with their own employee/con

    • by mjwx ( 966435 )

      Ignore laws, write off settlements as cost of doing business compared to revenue.

      Sounds about business as usual.

      How much longer can Uber keep doing it? Last year it was revealed they were losing $100 million a quarter. That was before the notion of giving out $100 million settlements to make people go away.

  • It's waist-deep, not waste-deep. As in, "He was waist-deep in waste."
    • maybe, however in this case Waste-deep may be just as appropriate, some of Ubers dodgy practises are slowly coming to cause a bit of a financial stink in the company.
      • by BeauHD ( 4450103 ) Works for Slashdot
        It was a typo but one could certainly argue otherwise.
        • You could, but you'd be wrong. The correct phrase works because we know what and roughly where a waist is. Your substitution makes as much sense as saying "air high" or "asphalt long".

  • by Anonymous Coward

    Valued at 62 billion? You have to be kidding me.

    I bet whatever stock trader-type person figured this out wears a suit.

  • by TheReaperD ( 937405 ) on Friday April 22, 2016 @04:14PM (#51967561)

    Anytime you have an organization that is truly disruptive to industry, you'll end up with problems like this. Uber and all similar companies that are disrupting their respective industries are having to fight an uphill battle with established industries, regulators and a whole host of organizations that have a vested interest in the way things currently work, such as insurance providers and licensing agencies. It's going to be messy with laws and organization eventually adapting until they become part of the establishment; usually with a compromise between the business models of the establishment and the disruptive group.

    • by Anonymous Coward on Friday April 22, 2016 @04:41PM (#51967759)

      yes, when a company purposely violates worker rights and safety laws...*gasp*.. they have problems with the law... shocking.

    • by tlhIngan ( 30335 ) <slashdot@wor[ ]et ['f.n' in gap]> on Friday April 22, 2016 @04:57PM (#51967873)

      Anytime you have an organization that is truly disruptive to industry, you'll end up with problems like this. Uber and all similar companies that are disrupting their respective industries are having to fight an uphill battle with established industries, regulators and a whole host of organizations that have a vested interest in the way things currently work, such as insurance providers and licensing agencies. It's going to be messy with laws and organization eventually adapting until they become part of the establishment; usually with a compromise between the business models of the establishment and the disruptive group.

      No, it's not disruptive. It's just cheating. The taxi industry went through the same things Uber is going through, except it was over decades ago It's why those regulations exist - because in the past, taxi companies cheated the heck out of people.

      The "sharing economy" is really more of a wage slave economy. The only thing they figured out how to do was to get people to ignore all the improvements to working conditions that were achieved and put into law and claim it as a new and innovative.

      You disrupt industry by doing things in new and innovative ways, not by finding loopholes in law that let you bypass existing regulations.

      Even things like banning drivers who turn down too many rides? That's not an independent contractor - an independent contractor has the right to determine which rides they will take without repercussion (other than not making money off it). Hell, all Uber had to do was send an alert to nearby drivers and ask them to "bid" on the job and give it to the lowest bidder - just like how contractors bid on projects, Uber would be revolutionary by having drivers bid on taking rides. If the person wanting the ride had the option of picking the ride they wanted (not necessarily the lowest, but include stuff like the car and driver's ratings) then Uber would've been a marketplace for selling rides. That would be innovative.

      • You disrupt industry by doing things in new and innovative ways, not by finding loopholes in law that let you bypass existing regulations.

        I honestly wonder how many honest people thought of the whole ride sharing idea and were in the process of trying to build their business the legitimate way before Uber broke laws and sailed right by them. It goes to show you, the people who get the biggest rewards in capitalism are the ones who play closest to the line of dishonesty without getting arrested.

        • I couldn't tell you how many but years ago, I had the idea of running people to and from bars in the local area. Until recently the city had on cab company that shut down at 8 pm and wouldn't allow any other cab companies to operate within the city (the city owned the cab company and a private company ran it ).

          Well it turns out that no matter what I attempted to call it, it was illegal. I even tried to pass it off as a site seeing tour but it still fell under the technical definition of a taxi service. I

          • by dbIII ( 701233 )
            The typical way to do things in a democracy is to talk to people about changing the laws instead of either giving up or going ahead and breaking them.
            That can be difficult, especially in the situation you mentioned where a government is getting money by selling the right to a monopoly (both anti-democratic and anti-capitalist), but it's better than just charging in and busting heads.
            • THIS is what I was referring to.
            • Oh i tried to get the laws changed. I even tried to get the cab company to extend the hours to accommodate the closing of bars in the area. I lacked the influence, power, knowledge and abilities to do it. I was met with what appeared to be concern when talking with council members and the mayor but it never went beyond that. This was before the internet so i got an op-ed piece in the local paper. It was edited to avoid pissing specific people off but the general sense of published responses was that people

              • by dbIII ( 701233 )
                You did the right thing - they didn't.
                Should they be rewarded for breaking the law while you don't get a chance at an opportunity?
      • Even things like banning drivers who turn down too many rides? That's not an independent contractor - an independent contractor has the right to determine which rides they will take without repercussion

        Umm...I'm the last person who'd defend Uber, however I don't see what the problem is there? If my business relied on contractors, I'd also favour the ones who showed themselves to be more reliable to take the work when it was available.
        They also have a vested interest here, as it stops hobby drivers just creaming off the most profitable jobs and allows their dedicated drivers to more easily make a living. This is one of the reasons it's illegal for regulated taxis to turn down a fare (in the UK at least).

        • by dbIII ( 701233 )
          The thing is they are employees in all but name without any of the benefits of being an employee or any of the benefits of being a contractor. It's third world style piecework without even the choice of getting piecework from another employer.
        • hobby drivers just creaming off the most profitable jobs and allows their dedicated drivers to more easily make a living

          This is the real problem with Uber. They want everything both ways. They call themself a "ride share" company but most of their drivers are dedicated drivers. If it was just a ride share and I was going there anyways then doing it for less than minimum wage would be fine. They want to call their drivers independent contractors but at the same time dictate when, where, and how much they charge (aka an employee). If I'm a contractor and I can pick up people when and where I want and charge whatever I wa

        • Even things like banning drivers who turn down too many rides? That's not an independent contractor - an independent contractor has the right to determine which rides they will take without repercussion

          Umm...I'm the last person who'd defend Uber, however I don't see what the problem is there? If my business relied on contractors, I'd also favour the ones who showed themselves to be more reliable to take the work when it was available.
          They also have a vested interest here, as it stops hobby drivers just creaming off the most profitable jobs and allows their dedicated drivers to more easily make a living. This is one of the reasons it's illegal for regulated taxis to turn down a fare (in the UK at least).

          Ahh, a Brit. Divided by a common language in legal terms as usual.

          In the US a contractor is supposed to be someone who a) has his own equipment, b) has his own business (ie: his own accountant, office, etc.), and c) takes jobs on a contract basis. If you've got a system where the contractor owns equipment (leased through Uber), uses Uber's statements for his financials, and thinks he has to take any work Uber offers that's by definition not a contractor. In fact if a driver HAS to take a job or he won;t get

          • Wrong. It's actually pretty much the same in the UK. There's a lot of controversy over this in the construction industry at the moment.

            P.S. before pontificating about language maybe you should learn the difference between "then" and "than".

    • It still amazes me the difference in how copyright violations and uber are being handled.
      Copyright violation: Kids want to ignore laws and set up pirate sites, let's sue them into oblivion.
      Uber: A business is ignoring laws for the sake of technological improvement! Let's support them!
    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Bullshit. This is not about the "business models" of the establishment. This is about safety and worker rights issues. I'm tired of Uber posting this red herring.

      What? Do you think the business models of taxi companies were somehow different from Uber? no, they tried to pull the same shit. Uber and the taxi companies are exactly the same.

      • I am not, nor have ever been, affiliated with Uber or any other ride-share company in any way. In fact, my girlfriend's dad is a taxi driver and I've heard all of the industry arguments. The taxi drivers are scared because their paycheck is on the line, potentially. Nobody thinks clearly when their livelihood is on the line, just ask the coal miners. The real rip-off with taxis is the rich medallion holders who are wailing because their "guaranteed investment" has devalued by half in the last ten years

    • to their industry. The Taxi cab companies already treat their employees like shit. Uber brought some of that out in the open, but it's not like they're changing anything. What Uber is disrupting is the Job Creator narrative. That a job, any job, is always in a person's best interest. Any fool can see the trap Uber's laying out for their drivers, customers and society at large. They're talking the cost of running a business and putting it off onto someone else. Insurance costs and the cost of paying for dama
      • You're just making stuff up. Nobody decides to be a cab driver because of some phony narrative that you're saying a cab company is telling them. Everybody involved is crystal clear on what it means to own a cab company, and work for one. Nobody is forced to work for one. Or forced to use what Uber is offering to do some of that work on the fly when it suits somebody to do so.
        • as such things usually are. It's not about deciding to be a cab driver. It's about accepting the low pay and complete lack of any financial stability. I forget who but some economist called it a 'fragile' existence. 66% of Americans live paycheck to paycheck. Meaning they're 1 check away from homelessness. You would think they'd be marching in the streets demanding change. They're not. Another phrase comes to mind: Quiet desperation.

          See, if you're gonna live like that you need something to keep you goin
    • by dbIII ( 701233 )
      Not so much disruptive as regressive.
      Piecework instead of wages is not a new thing.
  • by JeffOwl ( 2858633 ) on Friday April 22, 2016 @04:31PM (#51967683)
    So now they are going to expect tips on top of the agreed upon fare? I'm running out of reasons to use them.
    • They don't get any proper services included in their 1099 jobs so they depend on tips to have any hope of coming up with medical expenses or auto loan payments. No free ride.

    • by twotacocombo ( 1529393 ) on Friday April 22, 2016 @04:39PM (#51967749)
      Tips are, and have always been, optional. Nobody says you have to tip anybody. That being said, the first time I ever used Uber, nowhere did it say you couldn't tip through the app, and I assumed there would be a place to do so after the ride. Apparently not. Had I known, I would have given the driver a cash tip because he was great. I'm glad they've agreed to make this more clear. It only cost the driver a couple bucks that trip, but a couple bucks here and there starts to add up.
  • Yes US labor law is out of date. It is demented for health insurance to be linked to jobs. Only W2 jobs cover this. 1099 employers are not supposed to be able to dictate how people do their jobs (including if they pick up fares or not). Taxicab companies have to cover all the expenses of W2 while Uber ducks this by trying to stick them as 1099s. Uber is "transportation slavery" as a driver put it to me, who much prefers working with less exploitative ride services. They have "socialized risk" while privatizing profit. All the Uber drivers in a region should be able to strike, if they are a bargaining unit in some polygon that will be the only way they can get leverage. Working at the precariat level of the economy is a horrible experience and it can't continue. So many tech companies blow out existing players by undercutting as loss leaders, then turn it into a monopoly, then hike the prices. Walmart and Amazon have done the same thing. It is sick that no one in this realm is capable of working on healthy commercial ecosystems, it's either precariat oppression monopolies or bust.

    • by slew ( 2918 )

      I wonder, if Facebook's new "paid users" plan could be considered making them "employees" using this rationale.
      A slippery slope indeed...

      • Nope.

        Facebook actually has no control over who gets what money, who posts what, etc. They will issue a 1099K to anyone who gets a "tip" from another Facebook user, not the 1099-MISC Uber drivers get.

        OTOH Uber used to control which rides a driver could actually do through it's app, insist that they take them all via deactivation threat, etc.

  • Stop Gap (Score:5, Interesting)

    by 0100010001010011 ( 652467 ) on Friday April 22, 2016 @04:36PM (#51967729)

    Uber's long game isn't dealing with drivers ever. They poached a lot of CMU's robotics department. They've pre-ordered self driving Teslas.

    The sooner they can get rid of the Drivers the happier they'll be. Right now they're just collecting data for where and where to do the routes. I wouldn't be shocked if they're buying up property for parking garages / charging stations along highly traveled routes.

  • by Anonymous Coward

    I'm sure making it harder to remove drivers from the service for bad behavior, stop penalizing them for dropping rides, and letting them harass passengers for tips will be a big help to the Uber experience.

  • by Anonymous Coward

    There's nearly no barrier to entry and plenty of competitors with more money, better technology, and a reputable brand name.

    This company is garbage and won't be around in year 2020.

    • because they get put out of business the moment the local labor board points out that Uber drivers are employees in all ways and means. There's been several "It's Uber for...X!" companies that have failed. Uber has deep pockets from investor backing that allow them to keep appealing the rulings. Their plan is pretty obvious to keep appealing until self driving cars are a reality.
  • The $100M is conditional and depends on stock market valuation. And the $85M guaranteed is "before attorneys fees". Frankly, I'm a little surprised that Uber drivers might get ANY cash: class actions often end up as "$$ million for the attorneys, $$ thousand for the lead plaintiffs and coupons for everyone else." But I suppose offering Uber coupons to Uber drivers would just add insult to injury here.
    • Even if the full $84M sum was pair to the drivers equally it would be $218.18 per driver and that is going to be taxed since it's not resulting from a personal physical injury.

  • Either the customers accept the strong-arm of the drivers vis-a-vis tips, or they stop being customers since drivers won't pick them up.

  • by ugen ( 93902 ) on Friday April 22, 2016 @05:50PM (#51968249)

    The reason I like Uber is that transaction is predictable, "off line" and does not require complicated social ritual of tipping. If Uber drivers begin to expect tips, we are left with a regular taxi service, except that cars are smaller and not standardized. In which case, personally, I'll opt for a taxi again.

    • Umm... Uber tacks on a 20% tip to every journey. I guess you missed that.

      • Or maybe it changed... I just checked my last 3 trips... no tip was added in...

        I could of swore it added tip but it doesn't look like it.

      • by ugen ( 93902 )

        No tips on any of my Uber trips. I think tip is added in locations where Uber actually calls a taxi through their uberTAXI service.

        In any case, if "tip" is a fixed predefined amount that does not require haggling, then it's simply a cost of a trip and I wouldn't care. It's not the price (I can count) - it's the process of having to pay an unknown amount more, and doing so outside the clear and well defined channel of "meter->display amount->charge CC".

        • Tips, pretty much by definition, do not require haggilng. Simply choose a number (10,15 or 20%) and add that to the fare. If you choose a low number, it's customary to then round up to the next dollar.

          It's pretty much deterministic.

    • by dbIII ( 701233 )

      and does not require complicated social ritual of tipping

      The best way to deal with that is have a society that doesn't need the complicated social ritual of tipping and the reliance on the charity of strangers for people who actually have a job to have enough money to live on.
      The USA never completely got over slavery, and waitresses willing to put up with sexual harrassment in the hope of getting tips a symptom.

  • It claims it is not a taxi company but merely a software platform. It also claims its drivers are independent contractors. If they are independent contractors then surge pricing, where all the independent contractors quote the same price for the service amounts to price fixing and collusion. As the enabler of this collusion Uber becomes an aider and abettor to the collusion.

    So Uber could make their drivers franchisers. Franchisers are not allowed to set their own price, they have to kow-tow to corporate policy strictly. Thus Uber can dodge collusion charge. But franchisers have lots of rights too against the corporation, for example when someone buys a Subway franchise they get exclusive rights in an area and prevent corporation from setting up another franchise too close. So Uber drivers, as franchisers, would be able to limit the number of cars that are allowed in a market or in an area. So Uber might not like to give the drivers franchise rights.

    I don't see how Uber can deny the drivers both employee rights and franchisers right and have the ability to price gouge during demand spikes.

  • Uber needs to change their app to accommodate for all this. Maybe some sort of automatic bidding. I don't want to have to worry about carrying money. Maybe if you tip more by default they can get to you faster or maybe some drivers just demand higher rates like say for better cars or cargo capacity.

    I order a known service for a certain price and you deliver at that price. How are you going to go above and beyond to provide a better experience? I don't want to haggle afterwards. My tip is that I don't rate y

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