Uber settles disputes with thousands of drivers before IPO - Activate World

Uber settles disputes with thousands of drivers before IPO

Uber reached a settlement with tens of thousands of its drivers in the United States over their employment status. The dispute centers on whether drivers should be considered employees of the company or independent contractors. Uber declined to provide details of the settlement, but said it continues to believe its drivers are independent contractors, not employees. The drivers can decide on their own when they want to work for the company and they can work for competitors such as Lyft in addition to Uber, the company noted.

Lunchtime Conversations:

  • Uber drivers say they invest in the company by leasing or purchasing a car and paying for its upkeep and fuel to the benefit of the ride-sharing companies. Should Uber change its business model to better benefit its workforce? 
  • A bill is moving forward in California to reclassify workers drivers as employees rather than independent contractors – if the courts don’t do it first, can we expect more legislation that will improve gig workers’ collective bargaining power?
  • Artificial intelligence will be used in the self-driving cars of the future. Uber is counting on this technology to help it achieve profitability. What can ride-sharing companies do to ease the transition for drivers?

Noteworthy

  • Uber’s IPO on Friday has an expected valuation of around $90 billion placing it among the top three most valuable firms to ever debut on a U.S. exchange. 
  • Drivers say their well-being is taking a back-seat to profits and their demands include livable incomes, job security, and regulated fares.
  • Uber originally promised drivers 80% of a ride’s final fare – now that’s been reduced to 40% to 60%. Drivers want compensation to change so they’re paid per mile or per minute on the road.

Storyline:

There has been tension with Uber’s drivers for years and the company is trying to put as much of the issue to rest as it can before the IPO on Friday. The company said that more than 60,000 drivers in the United States have filed claims regarding their status and the settlement covers “a large majority” of them.

The settlement was disclosed in a regulatory filing with the Securities and Exchange Commission Thursday just ahead of its initial public offering. Uber said the settlement will cost it between $146 million and $170 million. It had already set aside $132 million in anticipation of reaching a settlement.

When companies go public, it usually means huge payouts for executives and sometimes nice payouts for employees. San Francisco’s housing market has been bracing for the thousands of newly minted millionaires spawned by four major IPOs this spring including Uber. Co-founder and former CEO Travis Kalanick’s stake may be worth as much as $5.9 billion.

However, the IPO won’t be life-changing for most drivers due to their status as independent contractors, not employees. Some drivers will receive one-time bonuses according to their loyalty: Those who completed more than 2,500 trips before April 7 and at least one this year are eligible for a bonus, ranging from $100 for those drivers with 2,500 completed trips to $40,000 for 40,000 completed trips. 

Even though the strike was not the global labor action organizers had envisioned, the effort attracted lots of media attention, and it also garnered the support of high-profile politicians on the left, including presidential candidates like Sens. Bernie Sanders and Elizabeth Warren. “Your Direct Action for today: Don’t take an Uber or Lyft just for the day. (Just today! Cabs are fine! You can do it!),” tweeted Rep. Alexandria Ocasio-Cortez. Even Mayor Pete Buttigieg tweeted that he was down with the driver’s strike.

Sources: CNN BusinessNew York TimesNPR, Slate

Photo by Thought Catalog on Unsplash