Uber drivers may be settling for about 12% of the total amount they could have received at trial.
Uber Technologies Inc. reached a $100 million settlement agreement in April for two class-action lawsuits brought by drivers who argued that they should be employees and were owed reimbursement. But, according to documents released this week, if drivers in both cases had won on trials on a class-action basis, the total settlement amount could have been up to $852 million.
The disparity between the two amounts could figure in the judge’s decision whether to accept the settlement—U. S. District Judge Edward Chen has yet to accept the agreement—but to get the higher amount, the plaintiffs would have to take the higher risk of going to trial.
Using the IRS’s fixed rate of reimbursement for miles, drivers would receive $852 million altogether, according to court documents. With a variable rate, drivers would receive $429 million, meaning the $100 million settlement would be about 23% of the amount.
That amount was calculated by the plaintiffs based on data from Uber and includes car reimbursement, cellphone reimbursement and tips owed, assuming a 20% gratuity. Amounts differ depending on the state, with California class-action drivers taking home the most.
The plaintiffs in the class action-lawsuits argue that they’re misclassified as independent contractors instead of employees, and thus are owed past expenses as employees.
As previously reported, the $100 million settlement would net the majority of drivers about $24. If only 50% of the eligible drivers filed a claim for money, California drivers who drove more than 25,000 miles could receive $8,000 apiece.
Sharon Liss-Riordan, attorney for the plaintiffs, has argued that the settlement also includes non-monetary aspects that are more beneficial to the drivers, including a change in Uber’s deactivation policy and the ability for drivers to post signs telling riders they can tip. The plaintiff’s council argued in court filings that in addition to the risk of a jury siding with Uber, plaintiffs faced risks from Uber enforcing arbitration clauses and which drivers could be certified as part of the class-action.
Typically, class-action settlements win a fraction of the amount that could have been won in trial. But the large disparity between the settlement and possible trial win in this case, according to Tom Rohback, a partner at Axinn Veltrop & Harkrider, could lead to more drivers objecting to the amount and play into the judge’s decision on whether the settlement is “just and fair.”
“It really is a very nuanced analysis that has to go on,” Rohback said.
Lyft Inc. had attempted to settle a similar lawsuit with its drivers for $12.25 million, but that agreement was rejected by the judge for being insubstantial.
Source: www.marketwatch.com
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