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April 22, 2016
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Ride-hailing giant Uber, currently valued at more than $60 billion, will pay drivers in California and Massachusetts at least $84 million to settle class action lawsuits seeking to overturn the drivers' status as independent contractors.
For the time being at least, the settlements mean Uber can continue using its independent contractor business model. The now-settled lawsuits sought full employee status for the 385,000 drivers joining the class action.
Though Uber can retain its business model for now, other similar lawsuits are yet to be tried or settled.
In its settlements, Uber also agreed to let the drivers form an "association," though not a union, to air grievances with the company. Uber also agreed to pay an addition $16 million to the drivers should its value rise by 50 percent over its December 2015 valuation, or if the company goes public.
In a statement, Uber CEO Travis Kalanick praised the company's independent contractor model: "Drivers value their independence—the freedom to push a button rather than punch a clock, to use Uber and Lyft simultaneously, to drive most of the week or for just a few hours. That’s why we are so pleased that this settlement recognizes that drivers should remain as independent contractors, not employees.”
The agreement must still be approved by U.S. District Judge Edward Chen of the Northern District of California. If he does not agree, Uber will go on trial in June.
