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PUBLISHED: May 10, 2016 10:47am

Lawsuit claims Uber underpaid drivers in US

The Uber logo is seen on a vehicle near Union Square in San Francisco, California, U.S. May 7, 2015.    REUTERS/Robert Galbraith/File Photo

Source:
Reuters

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SAN FRANCISCO, 10 May 2016: 

Drivers who worked for ride-hailing service Uber in California and Massachusetts over the past seven years would have been entitled to an estimated US$730 million (RM2.96 billion) in expense reimbursements had they been employees rather than contractors, according to court documents made public yesterday.

Uber and smaller rival Lyft are attempting to settle lawsuits by drivers who contend they should be classified as employees and therefore entitled to reimbursement for expenses, including gasoline and vehicle maintenance. Drivers currently pay those costs themselves.

According to attorneys for Uber drivers, the total potential damages in the case are US$852 million, when including a claim to recover tips.

The figure is based on rates for mileage reimbursement set by the US government and on data provided by Uber Technologies Inc.

The company, meanwhile, calculates damages at US$429 million, mainly due to a lower mileage rate.

The figures had been redacted in the original settlement deal proposed last month, but a San Francisco federal judge ordered them unsealed.

The new data reveals how much of a risk employee classification is for on-demand tech companies like Uber.

The proposed US$100 million settlement keeps Uber drivers classified as contractors, though US regulators are still reviewing the issue.

Uber drivers in California and Massachusetts were entitled to about US$122 million in tips, the filings show.

That means Uber made about US$732 million in commissions in those two states since 2009, based on an assumed 20% tip rate – more than US$100 million less than it would have cost to reimburse drivers for expenses and tips.

An Uber representative declined to comment.

The judge must decide whether the US$100 million Uber settlement is fair, and the total potential damages at play will likely bear on his analysis. The deal represents about 12% of the potential US$852 million in damages.

Lyft had agreed to settle its class action for US$12.25 million, but a separate federal judge rejected the deal because it represented only about 9% of the value of drivers’ claims.

While the deal does not elevate drivers to employees, attorneys for drivers have defended it, saying they faced significant risks had the case gone to trial.

They also say drivers who have worked several months could be entitled to thousands of dollars each under the settlement.

Beyond the money, Uber also agreed to new policies including an appeals process for drivers terminated by Uber.

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