Uber has agreed to pay up to USD 100 million to settle two class action suits filed by drivers who said they were employees entitled to benefits, rather than independent contractors.
The suits challenged a pillar of the business model of the pioneer of the so-called gig economy -- relying on workers with no set schedule and only a loose affiliation with the San Francisco-based company offering ridesharing services.
The suits were filed in California and Massachusetts. In the California case, a judge had approved the class action suit and was set to rule on it in June.
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Uber said in a statement yesterday it had agreed on a settlement with the plaintiffs.
They will continue to be independent contractors, but in exchange Uber will pay them USD 84 million, then another USD 16 million if Uber goes public and its market capitalization reaches a certain level, Uber chief executive Travis Kalanick wrote in the statement.
Uber will also create a driver's association in both states, help fund them and meet with them quarterly "to discuss the issues that matter most to drivers," Kalanick wrote.
