Reuters reports that court documents made public yesterday show Uber drivers covered by the O’Connor class action, namely those who worked for Uber in California and Massachusetts over the past seven years, would be owed an estimated $730 million in expense reimbursements alone if they were found to be employees. Meanwhile, the O’Connor settlement, if approved, would pay drivers $84 million to $100 million while maintaining the classification of drivers as independent contractors. More from Reuters:
The figures had been redacted in the original settlement deal proposed last month, but a San Francisco federal judge ordered them unsealed. The new data reveals how much of a risk employee classification is for on-demand tech companies like Uber. The proposed $100 million settlement keeps Uber drivers classified as contractors, though U.S. regulators are still reviewing the issue.
Uber drivers in California and Massachusetts were entitled to about $122 million in tips, the filings show. That means Uber made about $732 million in commissions in those two states since 2009, based on an assumed 20 percent tip rate – more than $100 million less than it would have cost to reimburse drivers for expenses and tips.
The discrepancy between the value of employee status and the value of the proposed settlement is similar to that in another class action concerning the classification of gig economy workers, Cotter v. Lyft, where a judge rejected the proposed settlement as monetarily inadequate. Notably, the Cotter settlement would have paid drivers approximately 10.3% of the assessed value of employee status; the O’Connor settlement at issue now would pay drivers approximately 7.3% of the assessed value of employee status (assuming Uber eventually paid the higher $100 million settlement value based upon the company’s valuation.) In both cases, the value of employee status is probably worth more than the assessed value of expense reimbursements.
The O‘Connor settlement still has yet to be approved or rejected by Judge Edward Chen of the Northern District of California. OnLabor will continue to monitor developments in the case.