What does Uber's rejected settlement mean for on-demand workers?

Written by
Changeboard Team

19 Aug 2016

19 Aug 2016 • by Changeboard Team

A US judge has thrown out a $100m settlement brought against Uber by drivers in two states.

U.S. District Judge Edward Chen ruled that the proposed settlement to the two class-action lawsuits in Massachusetts and California was not fair, accurate or reasonable for the drivers.

The case brought forward by close to 385,000 current and former Uber contractors contended that the taxi company should treat them as employees as opposed to independent contractors. They were also seeking protections including reimbursement for expenses such as petrol.

In response to the judge’s ruling, a spokesman for Uber said: “The settlement, mutually agreed by both sides was fair and reasonable. We’re disappointed in this decision.” 

The agreed settlement called Uber to review its practices and pay $84m to drivers with another $16m to be paid should the company go public.

Dozens of drivers filed objections to the proposal, citing that the agreement denied them an opportunity to put key decisions such as their employment status in front of a jury. 

Mark Skilton, a professor of practice at Warwick Business School said: “The Uber company growth and performance relies on this workforce to deliver the service. Uber want to treat this non-unionised group as a contractor arrangement which gives them the maximum flexibility and minimum employee commitments. The challenge is that a virtual business needs physical workers, at least until self driving cars come along.”

The rejection will add to the discussion on the rights of workers in the ever-growing ‘gig economy’. With the proliferation of on-demand work raising questions about employment law and workers rights leading to protests by Deliveroo drivers in London last week.

The threat of further automation in the services of on-demand services could lead to further job security for these ‘contractors’. 

Skilton commented: “If these low cost fares businesses continue to evolve with increasing automation and the increasing availability or oversupply of a workforce there will be some crunch points when pricing and cost of operation will impact human workers.”