Uber's $8 Million Calif. Driver Misclassification Deal Gets Green Light

San Francisco, CAA California federal judge has approved a deal for Uber to pay $8.4 million to settle misclassification claims from more than 1,300 Golden State drivers that predates Proposition 22-- a new gig economy law enacted in 2020 that designated certain app-based drivers as independent contractors.

Although the agreement does not go so far as to classify Uber drivers as employees under California law, it "is nonetheless of significant value to class members," the motion for preliminary approval filed on behalf of the drivers states. Uber drivers argued that the service provider misclassified them as independent contractors and therefore failed to pay minimum wage and overtime, reimburse business expenses and provide itemized pay statements and sick leave.

Drivers had asked for a summary judgment last August, during which time they claimed that Uber had misclassified them under a California worker status test known as the ABC test, which was put in place as part of Assembly Bill 5, a new state law.

The settlement, scheduled for final approval before the U.S. District Court for the Northern District of California in June, involves drivers who say they were misclassified as contractors instead of full employees, opted out of arbitration agreements and worked for the company between Feb. 28, 2019, and Dec. 17, 2020 – when Prop 22 was enacted. Each driver, under the proposed settlement, would be entitled to part of the settlement based on the number of miles drivers picked up passengers and food deliveries, as well as the number of miles driven. The case is James v. Uber Technologies, Inc., N.D. Cal., No. 3:19-cv-06462, motion for preliminary approval 2/17/22.

Similar Settlement and Class Action Lawsuit

This settlement comes on the heels of a $20 million settlement approved by the same court (the Northern District of California ) in 2019 between 15,000 California and Massachusetts Uber drivers who used the app between 2009 and 2019 and the company. Bloomberg Law reported back in September 2019 that more than 5,600 class members had made claims and will receive an average payment of $2,200 each, class counsel told the court. The parties originally reached a $100 million settlement that covered 240,000 drivers in California. But the court refused to approve the deal because many of the drivers had signed arbitration agreements. And In Canada, the technology giant has been hit with a $400 million class action lawsuit by drivers who argue that they are entitled to a minimum wage and a benefits package. CBC News reports that it could “have sweeping consequences for Uber in Canada.”