Uber dodges two tricky class action lawsuits in the US – but it takes a $100m payoff

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Uber has settled two class action lawsuits – but it took a pledge to pay up to $US100 million in arbitration opt-out payments to its drivers in California and Massachusetts.

A US District Court jury trial had been set for June in San Francisco (where Uber's headquarters is located).

At issue was whether Uber drivers should be legally defined as employees or (as the company currently classifies them around the world) independent contractors.

Uber was willing to shell out big money ($84 million now and $16 million if Uber has an IPO) to avoid the case going to court and potentially setting a precedent.

Previously, Uber drivers in both states could be cut loose with little or no warning.

Now, under the settlement announced today, an arbitration process has been set up – and drivers who choose to opt out of it will receive a payment of at least $US8000 if they accumulated at least 25,000 miles (40,234 km) in rides (if less, the money decreases proportionately).

Drivers will also be able to put up signs soliciting tips.

Uber will also create  a "Driver Association" with representatives who will meet management each quarter.

The settlement will be watched closely by Uber drivers in other US states – and around the world.

And lest anyone think he’s turning into a softy, Uber chief executive Travis Kalanick says the ultimate for his company is a fleet of driverless vehicles.

Meanwhile, he faces a fresh legal challenge from those pesky humans. Andrew Schmidt, a labour lawyer from Portland, Maine, has brought a new lawsuit. Mr Schmidt argues that if Uber drivers are indeed all independent automotive entrepreneurs, then they are violating anti-trust laws with their collusion over pricing (which is automatically set by Uber’s app, not drivers).

Mr Schmidt has generously offered to drop his suit if Uber recognises its drivers as employees, which he says would allow Uber to legally use set pricing to compete against other transport companies.

Uber recently raised $US2.1 billion, taking its total capital raising to more than $US12 billion and implying a total private equity value of $US62.5 billion.

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