Uber Settles Driver Labor Lawsuit for $100 Million
Yesterday, Uber settled the class action lawsuits in Massachusetts and California for approximately $100 million. The major take away from the settlement is that all drivers will remain independent contractors and there are some minor changes to how and when they deactivate drivers. Uber is making minor changes to its relationship with drivers in order to reduce the claims against them for employee status.
Below is the summary from Uber’s press release:
As part of this settlement, which covers all classification claims involving Uber in California and Massachusetts, the two sides have agreed that:
- Drivers will remain independent contractors, not employees;
- Uber will pay $84 million to the plaintiffs. There will be a second payment of $16 million if Uber goes public and our valuation increases one and a half times from our December 2015 financing valuation within the first year of an IPO;
- Uber will provide drivers with more information about their individual rating and how it compares with their peers. Uber will also introduce a policy explaining the circumstances under which we deactivate drivers in these states from using the app; and
- We will work together to create a driver’s association in both [CA and MA] states. Uber will help fund these two associations and meet them quarterly to discuss the issues that matter most to drivers.
At this time, the approximately 385,000 drivers will be sharing the 84 million dollar settlement. Usually 1/4 of this settlement goes to the lawyer, so the final amount split between the drivers is $63 million, with another $12 million if Uber goes public and increases to 1.5x Dec 2015 valuation. The average payout per driver is a measly $163 and this will depend on how much you drove on Uber and when you started with Uber. Drivers who were onboarded earlier and drove more will get a higher payout. The class of drivers is any driver since 2009 who signed up to drive in their own name (not through intermediate companies) in California and Massachusetts. This will include not only UberX, UberXL, and UberSelect drivers, but also UberBlack and UberSUV who signed up to drive under their own name.
I would hazard to guess that the most active drivers will get in the range of a few thousand dollars but it wouldn’t be much more than that. I probably would be getting somewhere near $150 but it is only a guess.
Changes to Uber’s Deactivation Policy
Uber will still continue to deactivate drivers for low ratings and for excessive ride cancellations (when drivers accept then cancel the ride before pickup). However, they will stop temporarily or permanently deactivating drives for not accepting trips. Here is their statement from Uber’s press release:
As part of this settlement, Uber has agreed not to deactivate drivers who regularly decline trips when they are logged into the app.
This is different from ride cancellations. This is when you do not accept ride requests when it appears on screen. There have been many drivers who noted issues with the app that either never notifies them of a trip request or show missed trip requests on their weekly statement. Usually this doesn’t amount to much but it can cause drivers to get warnings or temporary deactivation because of excess missed trip requests.
In the past, drivers would be deactivated because they decline too many trips. Here are a few reasons why drivers would decline trip requests:
- Not a surge ride (when they are in a surge zone, usually)
- Not an UberXL trip request (for XL drivers)
- Low passenger rating
- Don’t like pickup location (grocery stores, shopping plazas, some bars, college campuses) [In these cases, the driver had bad trips with passengers from these locations, hence will decline the trip]
Here is the progression of warnings from Uber about excessive missed trip requests:
- You will be automatically logged off after 3 missed requests in a row
- You will be barred from signing on for a short period of time (10-20 minutes) if you miss 5-10 trip requests in a row
- If you miss 10-20 trip requests in a given period of time (days, or a week), you can be temporarily deactivated for 24-48 hours.
What most drivers don’t know is that you can easily fight the temporary deactivation. All you need to do is to send an email to Uber stating that their temporary deactivation for missed trip requests is against the Uber agreement with drivers. It is written in the agreement that we can choose which trips we accept and the wording of such stipulations have not changed since 2013. If drivers email into their local office or Uber support, they normally get re-instated within a few hours, or overnight depending on the time of day the email was sent. This type of penalty and driver response had been going on since 2014. I doubt this is necessary anymore, but it may be good to know if you do get deactivated, despite their policy not to anymore.
But what about not accepting UberPool requests? From Uber’s press release, I would assume that we are not penalized for not accepting UberPool requests (like we are no longer penalized for regular Uber trips), but Uber may be more aggressive in preventing you to sign back online again if you miss only one or two UberPool requests.
Uber Drivers and Independent Contractor Status
Some of these minor changes are giving Uber drivers more freedom and closer to independent contractor status rather than employee status. Uber will change what they need to in order to appease the courts so that they can keep the independent contractor status for their drivers. There are still some that believe that the entire deactivation policy (see below) essentially proves that Uber drivers are employees and not independent contractors. The case is settled now, which will form a precedent for the other lawsuits in Florida, Arizona and Pennsylvania. The statement made here is really that Uber drivers were and are still independent contractors. There is a small minority of drivers that would like to be employees, but a plurality of drivers would like to remain independent contractors, despite the various rules and control Uber has over us.
This settlement will have a large effect on the sharing economy. It is still not clear who is and isn’t an employee, but more lawsuits over the next few years may clarify the picture.
Uber Deactivation Policy
It is kind of crazy that it took this long for Uber to publish something like this. The delay in publishing this list until now definitely was because of the lawsuit. You can see the full version of the deactivation policy here. It is valid in the United States but they are looking to establish similar rules worldwide. Most of the information on this document is rather common knowledge among many Uber drivers.
Because of this lawsuit, they are making a minor change to their deactivation policy. They will no longer deactivate drivers (temporarily or permanently) due to acceptance rates
Here is a short summary of different reasons why Uber can deactivate drivers:
- Star Ratings – if your rating falls below a certain threshold (different in every city, but 4.5-4.6 is common in most cities as the minimum threshold)
- Cancellations – if you accept and then cancel too many trips
- Acceptance Rate – they will no longer deactivate drivers temporarily or permanently for low acceptance rates.
- Deliberately increasing the time or distance of a trip;
- Accepting trips without the intention to complete, including provoking riders to cancel;
- Creating dummy rider or driver accounts for fraudulent purposes;
- Claiming fraudulent fees or charges, like false cleaning fees;
- Intentionally accepting or completing fraudulent or falsified trips.
- Uber’s Code of Conduct: for example: Violent or inappropriate behavior; Abusive language; or Having illegal substances in the vehicle.
- Zero tolerance for Drugs and Alcohol: Any driver found to be under the influence of drugs or alcohol while using the Uber platform will be permanently deactivated. Uber may also deactivate a driver who receives several unconfirmed complaints of drug or alcohol use.
- Compliance with the law:
- Engaging in serious illegal activity while using the Uber app;
- Not maintaining valid vehicle registration or driver’s license;
- Receiving serious traffic citations, or several traffic citations that indicate unsafe driving, while using the Uber app.
- Safe Driving – Uber will deactivate a driver who receives several or serious complaints of poor, unsafe or distracted driving while using the Uber app.
- Firearms Ban – Uber prohibits riders and drivers from carrying firearms of any kind in a vehicle while using our app. Anyone who violates this policy may lose access to Uber.
- Accurate Personal Information – We will deactivate a driver for activities such as:
- Providing Uber with inaccurate information;
- Allowing someone else to use his or her account;
- Taking a trip using an unapproved vehicle.
- Background Checks – We will permanently deactivate a driver if a routine motor vehicle record or background check uncovers a violation of Uber’s safety standards or of other criteria required by local regulators.
- Unacceptable Activities – We will take action against a driver for activities such as:
- Accepting illegal street hails while using the Uber app;
- Harming the business or brand, like unauthorized use of Uber‘s trademark or intellectual property, or otherwise violating the drivers’ agreement with Uber;
- Soliciting payment of fares outside the Uber system
- It is unacceptable to refuse to provide services based on characteristics like a person’s race, religion, national origin, disability, sexual orientation, sex, marital status, gender identity, age or any other characteristic protected under relevant federal or state law. Actions like these will result in permanent deactivation.
- Disability includes discriminating against people with support animals
Have more questions about Uber or Lyft? Head on over to our Rideshare Driver Training Course! Driver Promotions