What the Uber Settlement Means for Drivers, Passengers

The $84 million payout will bring changes to both

News broke late last week that rideshare powerhouse Uber settled two federal class-action cases that alleged its drivers were employees, not contractors, and deserving of workers’ benefits. While the payout seemed astounding—$84 million—it’s a drop in the bucket compared to what Uber would have lost if it was required to consider its hundreds of thousands of drivers as actual employees.

Currently a private company valued at more than $60 billion, Uber is looking to go public soon. If they lost one of the class-action cases, their valuation would have dropped precipitously and their jump to Wall Street would have been seriously complicated.

The settlement was the best choice for the drivers, the plaintiffs’ attorney Shannon Liss-Riordan told the L.A. Times, saying there was a good chance a jury in San Francisco—where Uber is based, and remains popular (especially since transit and cabs are as unreliable as they are here)—would have tossed their suit and they would have gotten zilch. The settlement money, which could be bumped to $100 million if Uber goes public and is valued even more than it was previously, will trickle down to as much as $8,000 for long-time drivers and a couple hundred bucks for the average Uber driver.

There are bigger changes that will benefit drivers, thanks to the settlement. The company’s ease at firing drivers who don’t log enough hours or have had a few complaints lobbed against them will be reduced; drivers will have an opportunity to address their mistakes before being shown the door. The settlement will also allow drivers associations to bring concerns to management, sort of like a mini-union.

As far as riders, the big change concerns tipping. While most passengers had no idea gratuities aren’t included in their fares, the settlement allows drivers to post signs saying that tips are welcome—how they will be offered, via phone or in cash, is not yet clear.

Don’t count on this being the end of changes to your typical non-complicated Uber ride—other cases against the company’s non-employee classification of its drivers remain undecided.