The figure was calculated by attorneys for drivers in a class action against the company, based on a standard rate for mileage reimbursement set by the U.S. government, and on data provided by Uber. Uber disputes the idea that drivers would ever be entitled to that reimbursement rate.
Uber and smaller rival Lyft are attempting to settle legal actions by drivers who contend they should be classified as employees and therefore entitled to reimbursement for expenses, including gasoline and vehicle maintenance. Drivers currently pay those costs themselves.
The proposed Uber settlement would pay drivers up to $100 million. A San Francisco federal judge must decide whether that deal is fair, and the total potential damages at play in the lawsuit will likely bear on his analysis.
According to attorneys for the drivers, the total value of driver claims in the Uber case is $852 million, which includes a tips claim. Uber calculates the total value of plaintiff claims at $429 million.
The $100 million Uber settlement represents about 12 percent of potential $852 million in damages, or about 23 percent of $429 million.
Lyft had agreed to settle its class action for $12.25 million, but a separate federal judge rejected the deal because it represented only about 9 percent of the potential value of drivers’ claims.
While the deal does not elevate drivers to employees, attorneys for drivers have defended it, saying they faced significant risks had the case moved forward. They also say drivers who have worked several months could be entitled to thousands of dollars each under the settlement.
Beyond the money, Uber Technologies Inc also agreed to a new policy governing driver termination, including an appeals process for drivers terminated by Uber. The privately held company will also clarify that drivers do not automatically receive gratuities from their fares and will allow them to solicit tips.
Additionally, the company agreed to assist with the creation of a drivers’ association. Those nonmonetary commitments expire in two years.
Author: Dan Levine