U.S. judge rejects Uber's driver expenses settlement

Thu Aug 18, 2016 9:21pm EDT
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By Dan Levine and Heather Somerville

SAN FRANCISCO (Reuters) - A U.S. judge on Thursday rejected an attempt by Uber Technologies Inc to settle a class action lawsuit with drivers who claimed they were employees and entitled to expenses.

In a case that has been closely watched in Silicon Valley, where many companies use on-demand workers, U.S. District Judge Edward Chen in San Francisco ruled the settlement was not fair or adequate for Uber drivers.

Some drivers had objected to terms of the settlement valued at up to $100 million, which would have affected roughly 385,000 current and former drivers in California and Massachusetts.

Uber drivers contended in the lawsuit they should be deemed employees and reimbursed for expenses such as gasoline and vehicle maintenance. Those expenses are now borne by the drivers.

The proposed settlement would have kept drivers classified as independent contractors. Several drivers who were part of the class filed objections with the court, particularly because the proposed amount was well below the total potential damages in the case of roughly $850 million.

In a statement, Uber said it believed the settlement was fair and reasonable.

"We're disappointed in this decision and are taking a look at our options," the company said.

Chen noted that part of the proposed settlement, $16 million, would only have been paid to drivers if Uber's valuation grew by a certain benchmark within a year of any initial public offering.   Continued...

An Uber car is seen parked with the driver's lunch left on the dashboard in Venice, California, United States on July 15, 2015. REUTERS/Lucy Nicholson/File Photo