A Federal judge said Thursday that he would deliberate on whether to approve a $100 million settlement that would end a class action suit brought on by Uber drivers who allege the rideshare company has misclassified them.
The settlement was reached in April between Uber and the lead attorney representing the drivers, Shannon Liss-Riordon, but was met by opposition from the drivers who called the terms of the deal “unfair.”
The suit accuses Uber of misclassifying the drivers as independent contractors despite requiring them to adhere to employee-like regulations. It settled earlier this year for $100 million, but a group of unhappy drivers said that amount was insufficient and called for Liss-Riordon’s ousting.
Liss-Riordon still represents the suing class of drivers, but new attorneys representing drivers who have brought additional claims against Uber argued in court for the deal to be halted.
Carrying signs that read “Fire Shannon,” the drivers attended a hearing at 450 Golden Gate Ave. in which a federal judge dissected the terms of a settlement. Many present at the courthouse said that once the settlement is split among the drivers and their attorney, they would be left with “peanuts.”
“A good third of that money is going to the attorney, and the rest will be released upon [Uber’s] IPO, assuming if and when that goes to market,” said Edward Escobar, who is from the Mission and serves as the spokesperson for the Alliance for Independent Workers, a group of drivers that formed to hold the company accountable for what they say are worker’s rights violations caused by the misclassification.
Under the deal, drivers are likely to be awarded $84 million in payment, and could receive another $16 million should the app-based startup, which on Thursday was backed with a $3.5 billion investment from Saudi Arabia’s Public Investment Fund, enter the public market.
Theodore Boutrous, an attorney representing Uber, said that the company believes the settlement is fair. When asked about the likelihood of drivers receiving their payouts, Boutrous said that given Uber’s growth, a successful IPO is “very likely.”
“[As part of our settlement negotiations], drivers are given additional stake in the company,” said Boutrous. “It’s a valuable term that’s worth a significant amount.”
The estimated 385,000 drivers covered in the suit will be compensated depending on their the miles they drove, and some newer drivers could walk with as little as $25.
“The money that they are offering is a pittance,” said Escobar, adding that the settlement would also keep the drivers classified as independent contractors. “For Uber, this settlement would mean business as usual. But if they want us to be like employees, they have to pay us as employees.”
Escobar criticized Liss-Riordon for foregoing “the drivers’ best interests” in exchange for a $25 million cut from the settlement.
Like many other drivers, Escobar also works for Uber’s Mission-based competitor Lyft – also involved in a separate class-action lawsuit over employee misclassification. He does so out of necessity, because cuts in fares aiming to keep Uber’s rates competitive make it difficult for drivers to make ends meet.
Though Uber has previously prohibited its drivers from unionizing, some Bay Area drivers have teamed up to demand compensation for expenses such as gas, insurance and vehicle maintenance, which they are expected to fork over themselves.
“I don’t think that they have a real understanding of what we actually have to deal with,” said Mission resident Valerie Mitchell, who began driving for Uber in 2014 because the money was good and the promise of a flexible schedule appealing.
“I paint on the side, and the flexibility in time was fabulous,” said Mitchell. “But now, I drive almost everyday. I’m definitely full-time, and it’s still not enough.”
Mitchell said that over the past two years, the company has slashed its rates continually, making it difficult for the drivers to maintain the flexible schedules advertised by the company.
Margot Castro, a Mission-based immigration consultant, said she too is troubled by the low wages and long work hours of many of her Uber driving clients, many of whom are immigrants and speak English as a second language.
“Some [drivers] don’t even know that this is wrong. [Uber] has a lot of money but they make [their drivers] very poor,” said Castro. “Some are telling me they don’t have time for their families.”
In the courtroom, Liss-Riordon defended her decision to settle during a hearing that stretched nearly four hours.
“This settlement would provide relief for a class that at this stage of litigation is at risk,” said Liss-Riordon. “If anyone wants to opt out there’s nothing stopping them.”
But Judge Edward Chen questioned provisions of the settlement and opted to give his decision at a later time, though no date has been set.
Chen scrutinized the terms under which a driver can be deactivated, or terminated from the app at will, and also questioned promised changes to the company’s tipping model.
Unlike Lyft, Uber has not incorporated a tipping option in its app platform, and drivers who ask for tips are often punished by negative ratings from riders, which in turn can lead to termination.
Under the settlement, the company promises to do more to encourage riders to tip their drivers.
Some drivers expressed frustration with the outcome of the hearing, saying that their contracts with Uber have affected their quality of life and ability to survive in the Bay Area.
“I’m disappointed, there are so many issues that I feel have not been touched on,” said Mitchell after leaving the courtroom, such as the company’s refusal to compensate drivers for the rides they make to riders’ pick-up destinations.
The group was supported in their demands by the labor union SEIU 1021, and spokesperson Shum Preston called the driver’s misclassification a “current social justice issue.”
“What we’re seeing in the Bay Area is this new gig economy, and that often means for workers that they are getting the worst deal,” said Preston. “They don’t have the various employee protections, and are out there alone trying to negotiate with this gigantic company.”