Uber, Lyft Set to Defend Driver Settlements in Court

Uber, Lyft Set to Defend Driver Settlements in Court
Image credit: Reuters | Lucy Nicholson | Files

Grow Your Business, Not Your Inbox

Stay informed and join our daily newsletter now!
2 min read
This story originally appeared on Reuters

Uber and Lyft on Thursday will attempt to persuade separate U.S. judges to approve class action settlements which keep drivers classified as independent contractors instead of employees.

The ride-hailing companies are seeking to resolve lawsuits by drivers who contend they should be deemed employees and therefore entitled to reimbursement for expenses, including gasoline and vehicle maintenance. Drivers currently pay those costs themselves.

A ruling that these workers are employees would affect the profits and valuations at so-called on-demand technology companies, including cleaning service Handy and delivery company Postmates.

Uber agreed to settle its lawsuit for up to $100 million, plus other benefits including help forming a drivers' association. Attorneys for drivers argue that the deal is fair, because the lawsuit faced significant risks and drivers could have wound up with nothing if the case moved forward.

However, the settlement has drawn objections from numerous drivers who say it shortchanged them, particularly because the total potential damages in the case reached $852 million. 

The deal is subject to approval by U.S. District Judge Edward Chen in San Francisco.

A $12.25 million agreement reached by Lyft has already been rejected by U.S. District Judge Vince Chhabria, who said it was too small. The company and attorneys of drivers have renegotiated, and are proposing a $27 million deal. 

Attorneys representing the Teamsters union had objected to the previous Lyft deal because it left drivers as independent contractors. However, Chhabria said he was concerned with the settlement amount, not the fact that the deal did not classify drivers as employees.

(Reporting by Heather Somerville and Dan Levine; Editing by Richard Chang)

More from Entrepreneur

We created the SYOB course to help you get started on your entrepreneurial journey. You can now sign up for just $99, plus receive a 7-day free trial. Just use promo code SYOB99 to claim your offer.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Entrepreneur Store scours the web for the newest software, gadgets & web services. Explore our giveaways, bundles, "Pay What You Want" deals & more.

Latest on Entrepreneur