Uber reached a settlement of $100 million in a lawsuit against its drivers on Friday. Drivers will still be under contract but can now expect tips from passengers.
Since September 2015, Uber had been facing a lawsuit built around worker classification. More than 400 drivers sued because they weren’t protected under independent contracts, which meant they wouldn't be granted overtime compensation or health insurance.
According to the official Court of Appeals document, the plaintiffs also brought the lawsuit to the table to encourage Uber to stop including tips in the fare, arguing that they need something to cover gas and maintenance.
Uber’s large-scale business model will stay the same and drivers will remain independent contractors and will not be reimbursed for expenses, qualify for health benefits or be compensated for overtime.
Drivers who make enough money during the quarter still have to pay taxes.
Nick Bragg, a senior at Chico State drove for Uber in December to earn a little extra money over the break.
“I believe once you make a certain amount of money, you have to declare that as income on your taxes. Since I just did it over winter break I didn't make enough to declare it in my taxes,” Bragg said.
Uber’s CEO Travis Kalanick addressed the lawsuit in a press release, saying that the reason they keep drivers under contract is so drivers have the flexibility to leave work and return when they want to.
“In the U.S. almost 90 percent say they choose Uber because they want to be their own boss,” Kalanick wrote. “Drivers value their independence—the freedom to push a button rather than punch a clock.”
On April 22, Uber agreed to an $84 million settlement with $16 million worth of add-ons. Some of the contingencies were removing the “tips are included in the fare” note on the app and website and allowing drivers to put “tips are appreciated” signs in the windows of their cars.
Prior to the settlement, Bragg said there were times passengers gave him a tip but he never counted on them.
“It's always nice when someone leaves a tip, but it's not necessary,” Bragg said. “During the process of becoming an Uber driver they tell you to not expect tips.”
In addition to tips, drivers who drive over 25,000 miles during a quarter will get a bonus of $8,000 under the terms of the settlement.
Kalanick said the company will be working with Uber drivers to create a drivers association so they can “air their grievances” with management.
Photo Credit: Whitney Urman
By Whitney Urmann
