After years of contentious litigation, Uber Technologies Inc. has decided not to leave its fate in the hands of jurors. Instead, Uber announced on Thursday that two of the most closely watched class actions against it had settled…for $100 million. In addition to the hefty price tag, Uber made a number of concessions including: Uber cannot deactivate drivers for refusing rides; Uber will create an internal appeals process; Uber will establish a “driver’s association” to meet quarterly where drivers can “discuss the issues that matter most to drivers”; and quality courses for deactivated drivers will be made available. Nevertheless, the decision to settle raises more questions than it answers.
First of all, the settlement leaves one of the (if not the) biggest legal challenge undecided: are Uber drivers in California and Massachusetts employees, or independent contractors? Uber CEO Travis Kalanick said the “settlement recognizes that drivers should remain as independent contractors, not employees.” But that does not address the legal nuts and bolts, and it is entirely possible that another lawsuit may be brought in the future. This is especially true considering a number of concessions will expire in at most two years.
Second, some of the new policies Uber is rolling out as part of the settlement contain serious ambiguities. For instance, Uber will no longer deactivate drivers for refusing rides. Instead, drivers may be deactivated for “sufficient cause.” What does that mean? Well, the new internal appeals process (in California and Massachusetts) will surely be plenty busy answering that question! And hey, what if drivers do not agree with that internal appeals process? Then they can arbitrate the decision under Uber’s new arbitration clause. Of course, the new clause has yet to be challenged in court, so who knows if that will stand the test of time.
At the end of the day, everybody got at least some of what they wanted: Uber gets some certainty in its payout, and the drivers get some clarity in Uber’s policies and procedures (and a relatively small check). Sure, it may look like Uber is just kicking the proverbial can down the road, but at least you can hail an Uber to keep up with it.