From CNET: A federal judge on Thursday rejected the proposed settlement of a class action lawsuit that claimed Uber misclassifies its drivers.
US District Court Judge Edward Chen for the Northern District of California ruled that Uber's settlement offer, in which it would have paid $100 million to roughly 385,000 drivers in California and Massachusetts, was unfair, inadequate and unreasonable. Under terms of the settlement, Uber would have also been allowed to continue to classify drivers as independent contractors, avoiding a host of expenses associated with employees.
The proposed settlement, reached in April, appeared to end a threat to 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 meant the company would not be responsible for all sorts of costs, including Social Security, health insurance, paid sick days and overtime.
Under the terms of the proposal, Uber would no longer be able to terminate drivers at will and would have created appeals panels for drivers who feel they have been terminated unjustly. Uber would also make clear to riders that tips are not included in Uber's fares, and drivers will be permitted to post signs reflecting that arrangement.
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