By: Chelsea L. Zwart
September 30, 2016
In May 2016, Chapman Glucksman Dean Roeb & Barger published an article entitled, “$100 Million Uber Settlement Maintains Classification of Drivers as Independent Contractors,” which discussed a potential $100 million settlement related to a class-action reclassification suit against the on-demand driver service, Uber, brought on behalf of its drivers. The settlement, if approved by the Court, would maintain classification of the drivers as independent contractors rather than employees, resulting in significant future savings to Uber.
The plaintiffs and the California Labor and Workforce Development Agency estimated that the Private Attorneys General Act (“PAGA”) portion of the class action could result in civil penalties of over $1 billion for violations of the California Labor Code. However, the proposed settlement only allocated approximately $1 million to the PAGA claim. On August 18, 2016, Judge Edward Chen of the United States District Court for the Northern District of California issued an order rejecting the proposed settlement, stating that it “is not fair, adequate, and reasonable,” particularly given that the proposed settlement of the PAGA claim was only “.1% of its estimated full worth.”
Judge Chen commented that he expects his order to be appealed, and thus we will continue to monitor the case and provide updates as developments unfold.