Uber is settling two legal lawsuits brought by drivers who sought to be classified as employees instead of independent contractors.
The ride-hailing firm will pay up to $100 million to the 385,000 drivers, but their employment status will not change.
The class action lawsuits were filed in California and Massachusetts.
The $70 billion privately held company will pay $84 million in an initial payment and then pay another $16 million if the company goes public.
As part of the settlement’s terms, Uber must give drivers more warning before they are removed from the service. The company must also establish an appeals process for drivers who believe they have been unfairly terminated.
The $100 million Uber settlement must still be approved by a judge. It also allows for the creation of a “driver association” that will represent contract workers in talks with Uber management.
Driver will also now be allowed to post signs in their cars that tell Uber passengers that while tips are not included or required “they would be appreciated.”
Uber drivers will be paid out from the settlement based on how many miles they have driven. Those with more than 25,000 miles under their belt will receive roughly $8,000 each.
Despite the $100 million settlement, Uber is the real winner. The company can continue to claim that its drivers are independent contractors. That means the company doesn’t have to provide health insurance and other costly benefits to its massive legion of drivers.
The company says most of its drivers love the independence that comes with being their own boss, including the ability to work as much or as little as they would like.
“That’s why we are so pleased that this settlement recognizes that drivers should remain as independent contractors, not employees,” CEO Travis Kalanick said in a statement.