A court decision leaves one of the world’s largest Silicon Valley companies hanging, as US District Judge Edward Chen ruled Thursday that ride-sharing giant Uber’s proposed settlement versus its drivers is inadequate.
Uber has had the case in courts since 2013, when its drivers in California and Massachusetts filed a claim saying that they were employees who were entitled to expense reimbursements. Uber argued that they were independent contractors, thus not qualified for such benefits, USA Today reports.
The drivers and their attorneys had arrived at a settlement with Uber in April to the tune of $100 million. However, Chen in San Francisco stated that the agreed-upon amount was not fair for the drivers as it was too low.
Under the settlement terms, the plaintiffs would have continued as independent contractors, getting a sum based on the number of miles they drove.
The April settlement, filed in a Northern California District court, stipulated that Uber would pay the drivers who had joined the lawsuit $84 million, with a second $16 million payment if the company were to go public, and if its valuation increased 1.5 times more than its worth in December 2015.
Chen stated that the majority of the settlement was “adequate” and had no issues with the drivers as independent contractors. What he did have a problem with was the total amount offered.
Uber could not give the judge details on how likely the outcome would be, prompting Chen to decline the settlement and reject the claim. He said that $84 million was too low at only 5% of what the drivers could have won from a jury.
Some plaintiffs in the original case had previously stated that Uber’s proposal was too small. In a statement, Uber pointed out that the settlement was agreed upon by both parties, that the amount was reasonable and fair, and that it was looking at other options.
The drivers and Uber can now either go back to negotiating or choose to go to trial. Shannon Liss-Riordan, attorney for the plaintiffs, said, “It is possible the parties could reach a revised agreement that satisfies the court’s concerns regarding the PAGA (Private Attorney General Act), claims. But if not, as I’ve said before, I will take the case to trial and fight my hardest for the Uber drivers.”