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Uber will pay up to $100 million to settle driver class action lawsuit involving independent contractors

Uber, the online ride-sharing company, has become a major player in the transportation industry in recent years. Uber relies on hundreds of thousands of drivers to transport passengers. These drivers are classified as independent contractors, and not as employees. This classification is a major benefit to Uber, as it allows the company to avoid paying drivers overtime and other benefits. This classification also prevents Uber drivers from requesting reimbursements from the company for gas, automobile depreciation and other expenses.

Last year Uber drivers in California and Massachusetts filed a class action lawsuit in California, seeking to be classified as employees. Last month, Uber and lawyers for the drivers settled the lawsuit, with Uber agreeing to pay at least $84 million to these drivers, and up to $100 million depending on the company's value after an initial public offering.

In addition, Uber will create drivers' associations in California and Massachusetts. These groups can bring driver concerns to Uber's attention. Uber will also create a policy discussing how and why Uber drivers can be deactivated from Uber's list of drivers.

Despite the settlement, Uber may have achieved its goals

While $100 million is a lot of money, Uber got a key concession in the settlement with the class of drivers. Specifically, Uber drivers will remain independent contractors. This is a critical part of the company's business model. Companies across Silicon Valley and the United States seeking to emulate Uber's use of independent contractors were watching this lawsuit carefully.

Lawyers for the Uber drivers stated that there is nothing preventing lawmakers from reclassifying Uber drivers and drivers in similar companies as employees. But for now, the Uber model remains intact.

If you have reason to believe that you have been misclassified as an independent contractor when you are actually an employee, you may want to discuss your situation with an employment lawyer. For years, the attorneys of Thatcher Law Firm have represented clients across Maryland and beyond.

Source: Uber drivers remain independent contractors as lawsuit settled, Dan Levine, Reuters Technology, April 22, 2016

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