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Uber settles employee rights violation claim for $100 million

The classification of Uber drivers has made news headlines across the United States, and the company recently settled a class-action lawsuit brought forth in a federal district court in Massachusetts over that very issue. The difference between an employee and an independent contractor is significant, and some Uber drivers claimed that their employee rights were being violated because of how they had been classified. Uber ultimately shelled out $100 million to settle that suit and one other, and two other suits have been filed since then.

Approximately 385,000 people drive for Uber, none of whom are classified as employees. Instead, drivers are considered to be independent contractors who are not eligible benefits such as overtime pay or expenses related to the job. This means that the cost of all of the mileage and gas going into a vehicle falls on the shoulders of its driver rather than Uber itself. The class-action suit filed against the company was seeking back pay for these types of costs, and while Uber eventually did settle, part of that settlement included the continued classification of drivers as contractors rather than employers.

So why is there such confusion concerning the status of Uber drivers? Independent contractors often highlight the freedom that comes with their working style, and while Uber drivers can drive -- or park -- whenever they want, they are also required to adhere to certain standards. Uber requires that all of its driver strictly conform to the company's branding when they hop behind the wheel.

The Uber litigation might have brought the issue of purposely misclassifying employees in order to save money into the limelight, but this is certainly not the first instance of such behavior. An untold number of workers in Massachusetts have been wrongly denied the benefits they deserve by being classified as an independent contractor rather than an actual employee. Although there has been no change in the classification of Uber drivers, the resulting recourse for the involved drivers will possibly set a precedent for future claims of employee rights violations.

Source: inc.com, "The $100 Million Uber Settlement: Will the On-Demand Economy Change the Nature of Employment?", Jeff Haden, May 3, 2016

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