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US judge rejects Uber's $100 million settlement in class-action lawsuit

A proposed settlement in a major class-action lawsuit against the ride-hailing service Uber has been rejected by a US federal judge who ruled that it was neither fair nor adequate for its drivers.

The company had previously agreed to pay up to $100 million to some 385,000 of its current and former drivers in the states of California and Massachusetts.

The Uber drivers had originally sued the service over the way that it had classified them as independent contractors as opposed to employees. The later which would have entitled them to a number of benefits including health insurance, overtime, paid sick days and Social Security.

The US district judge Edward Chen issued a ruling on Thursday in which he said that the deal was “not fair, adequate and reasonable.” Chen also noted that the $100 million settlement was less than five per cent of the total value of all the claims made by the Uber drivers.

In April, the court and Uber agreed to a proposed settlement that would have required the company to pay $84 million and possibly another $16 million if its initial public offering (IPO) was successful. The company would have been allowed to continue to classify its drivers as independent contractors and would not be responsible for providing them benefits.

Uber would have also been responsible for informing drivers as to why they had been fired or as the company puts it 'deactivated.' The company would also have to make it clear that tips are not included in rides from the service and its drivers would be allowed to post signs to inform their passengers about this issue.

Uber has expressed its position on the ruling and has released a statement in which it said: “The settlement, mutually agreed to by both sides, was fair and reasonable. We're disappointed in this decision and are taking a look at our options.”

Image Credit: Prathan Chorruangsak / Shutterstock

Anthony Spadafora
After living and working in South Korea for seven years, Anthony now resides in Houston, Texas where he writes about a variety of technology topics for ITProPortal.