Uber drives in California and Massachusetts were disputing the company’s labor practices, saying that Uber was treating them as independent contractors to save money when in fact the company exercised a level of control over their employment that should allow them to be classified as employees (which would put Uber on the hook for benefits and various things that companies are required to give to employees, but not contractors). The case was closely watched. Many felt that this was the big chance to strike a legal blow against the more exploitative business aspects of the “gig economy.” But no!
The cases have been settled. And here is what the 385,000 drivers covered by suit get: roughly $100 million, and agreements from the company to share more information with drivers and stop deactivating drivers so quickly for refusing rides, and to support the creation of “drivers associations” in California and Massachusetts.
Drivers associations, of course, are not unions.
Even a hundred million bucks is not much split 385,000 ways. (The Wall Street Journal notes that while “some drivers could receive upward of $8,000,” most will get only a “nominal” amount.) So the average driver is walking from this with a marginally more open workplace, and not much else.
Uber, on the other hand, is walking away with this: an existential threat to its business model laid to rest, and a valuation of many tens of billions of dollars kept safely out of the hands of its drivers.
I am not a lawyer. Maybe the lawyers thought they would lose the case in court? Otherwise it is hard to understand why they would have agreed to this deal. This will not be the end of challenges to Uber’s business model. But you can be sure that every time a new challenge arises, the company will be waving this settlement around as proof that nothing should change.