Uber, Drivers Resume Talks After $100 Million Deal Falls Apart

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Uber Technologies Inc. doesn’t appear ready to walk away from further negotiations with its drivers in their dispute over whether they should be treated as employees rather than independent contractors.

Three weeks after a federal judge threw out their $100 million settlement in a case central to the future of the sharing economy, the parties told a federal appeals court they’ve resumed negotiations. The parties have sought a 60-day extension before their appeal as they attempt to hash out a fresh pact over compensation, according to the joint status report filed Sunday.

“Although the district court has denied preliminary approval of the parties’ previously-negotiated settlement agreement, the parties continue to engage in good faith discussions regarding a potential resolution to these lawsuits,” reads the filing.

The original settlement had sought to do away with lawsuits with potentially billions of dollars in claims under California’s bounty-hunter law, which gives workers the right to step into the shoes of the state labor secretary to bring enforcement actions.

Uber could have walked away from further negotiations after an appeals court hinted it might overrule a key pretrial ruling in the fight over whether drivers must be treated as employees. Today’s statement to the court is clear indication they’re not quite ready to sever talks with their drivers.

Judge’s Denial

While acknowledging the risk for drivers and Uber if the case goes to trial, U.S. District Judge Edward Chen concluded on Aug. 18 the deal was unfair, partly because it low-balled potential claims under California law. He said he also wasn’t convinced that changing the company’s tipping policy would result in the “substantially increased income” for drivers as promised.

Lyft Inc., the second-largest U.S. ride-hailing company behind Uber, moved closer on June 23 to sealing its $27 million deal with drivers that leaves them classified as independent contractors. U.S. District Judge Vince Chhabria in April had rejected an earlier $12.5 million offer, saying it shortchanged drivers because it didn’t account for the company’s rapid growth.

The Uber case is O’Connor v. Uber Technologies Inc., 13-cv-03826, U.S. District Court, Northern District of California (San Francisco). The Lyft case is Cotter v. Lyft Inc., 13-cv-04065, U.S. District Court, Northern District of California (San Francisco).