Human cloud, ride-sharing firm Uber will pay $1.3 million to settle a lawsuit in federal court in North Carolina that it misclassified drivers as independent contractors. Separately, a court in Ontario invalidated an arbitration agreement between Uber and its drivers in another misclassification lawsuit.
The class-action lawsuit in North Carolina includes all US drivers who opted out of arbitration agreements with Uber, which involves 5,200 drivers, according to court records.
Drivers in the case would receive an average of $140, and drivers who have not driven with Uber for a period of time must agree not to seek reactivation of their accounts. Also, $434,750 of the settlement will go toward attorney’s fees. The settlement was signed on Thursday by Judge Catherine Eagles.
Meanwhile, Ontario’s Court of Appeal ruled that an arbitration clause in Uber’s contract with drivers was invalid. The decision released Wednesday was in a proposed class-action lawsuit brought by a driver claiming misclassification as an independent contractor.
The lawsuit proposes to include Uber drivers for both passengers and UberEats in Ontario since 2012 and claims possible damages of C$400 million.
In its decision, the court noted that whether Uber drivers are independent contractors or employees is an important issue for all persons in Ontario and ought to be determined by a court in Ontario.
It also found the arbitration clause unconscionable at common law. The clause required drivers to mediate claims under Dutch law and then go to arbitration if the claims are not resolved within 60 days, according to the decision. However, drivers would face upfront costs of US$14,500 to bring the case to mediation even though drivers such as the appellant in this case earn about C$20,800 to C$31,200 per year before taxes and expenses.
In a statement, Uber Canada said it was reviewing the decision, the Calgary Herald reported.
In September, the US Court of Appeals for the Ninth Circuit had ruled that Uber drivers’ misclassification claims must go through arbitration per Uber’s agreement.