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Uber Headed to Arbitration

Saturday, October, 15, 2016

Despite a federal judge rejecting Uber’s $100 million settlement offer, the company is likely headed to arbitration. The rejection was part of a lawsuit filed against Uber by its workforce, claiming they were misclassified as independent contractors instead of employees. It was a class action suit filed in California and includes approximately 240,000 former and current Uber drivers hoping to receive compensation that would have included reimbursement of expenses and tips.


Uber reached a preliminary $100 million settlement, but a federal judge rejected the settlement, calling it “not fair, adequate and reasonable.” According to legal experts, it would be expected the parties would negotiate to reach an agreement following the rejection, using the judge’s ruling as a blueprint for the settlement.


In this case, Uber is fairing far better than expected and the rejection is actually not even seen as bad news for the company. Furthermore, Uber won a September 7th ruling concerning a case at the US Court of Appeals for the Ninth Circuit that had originally called the company’s arbitration agreement invalid. The ruling is expected to drop the number of plaintiffs in the IC case from 240,000 to 8000. Uber is expected to use the reduction as leverage and try for a much smaller settlement than what was part of the original agreement.


Those familiar with the case have called Uber’s arbitration agreement very similar to a lot of gig economy companies that are setting up people who do work for them with a just a “click here” instruction for agreeing to massive terms of use agreements.