Uber's Settlement to Keep Drivers as Contractors Could Save It as Much as $750 Million

Image: AP
Image: AP

Last month, Uber settled two class-action lawsuits for $84 million to keep its California and Massachusetts drivers as contractors. Now, court papers reveal that the ride-hailing company could owe those workers as much as $750 million more if they were classified as employees.


Reuters reports that a San Francisco federal judge ordered the release of compensation figures that would apply if Uber workers were classified as employees. The gist is that if Uber were an employer, it would be expected to pay reimbursement for expenses—like upkeep of cars and gas.

Attorneys working on behalf of drivers in California and Massachusetts reckon that those reimbursements—along with a claim to recover tips—would require Uber to stump up $850 million to cover payments it hasn’t made over the past seven years. Even Uber’s attorneys reckon the drivers would be entitled to $430 million. (The disparity is apparently due largely to differences in mileage rates, says Reuters.)


Instead, Uber has settled out of court for $84 million, with a further $16 million potentially due if it goes public. That totals to about 12 percent of the sum that the drivers’ attorneys claim they’d be entitled to. As we’ve explained in the past, ensuring that drivers remain as contractors and not employees is totally worth it for Uber, and these court documents demonstrate why. Despite its huge success, $750 million is still a sizeable chunk of change.

Uber’s counter point, which its CEO Travis Kalanick often makes, is that “drivers value their independence—the freedom to... drive most of the week or for just a few hours.” But one suspects that they’d value some cold, hard cash even more.

It’s worth noting that the settlement is still subject to legal approval. These figures may go some way influencing the outcome.



Contributing Editor at Gizmodo. An ex-engineer writing about science and technology.

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I read somewhere however that classifying their employees definitively as independent contractors now opens Uber up to charges of price fixing since the “independent contractors” aren’t allowed to charge different prices between each other.