Uber drivers to remain independent contractors under settlement

CNET reports:

Uber has settled a pair of class-action lawsuits over how it classifies its drivers, an agreement that could have a huge impact on Uber's business model.

Under the agreement (see below), which settles lawsuits filed in California and Massachusetts, Uber will continue to classify drivers as independent contractors but pay as much as $100 million to the roughly 385,000 drivers involved in the lawsuits. The ride-hailing company also agreed to concessions, including providing drivers with more information about why they are banned from the service and create a "Driver Association" in both states to address drivers' concerns.

The settlement, filed Thursday in US District Court for Northern California, threatened the foundation of Uber's business model. The company has grown dramatically in the past six years by providing a smartphone app that sidesteps taxicabs and provides a connection between people who want a ride and de facto cab drivers who pilot their own vehicles. But their classification as independent contractors upset drivers, because it means the company is not responsible for all sorts of costs, including Social Security, health insurance, paid sick days and overtime.

Under the settlement, which still requires court approval, Uber will no longer be able to terminate drivers at will and will create appeals panels for drivers who feel they have been terminated unjustly.

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