Popular online ride-hailing company Uber Thursday settled two major class-action lawsuits that will allow the company to keep its business model intact by continuing to classify its drivers as independent contractors.
The settlement was announced by Uber and the plaintiffs, who sought employee status and the benefits that come along with it.
Settlement of the lawsuits, filed in California and Massachusetts, will cost Uber as much as $100 million. Uber must pay $84 million to the plaintiffs and an additional $16 million if the company goes public and meets certain business goals.
In a concession to the plaintiffs, the drivers will be able to display signs in their vehicles that say, "Tips are not included" in the fare and that tips are welcome.
Uber also agreed to improve the way it communicates with its drivers about ratings and termination, and allow arbitration over such matters. Prior to the settlement, Uber could dismiss drivers without explanation.
The drivers represented in the lawsuits, roughly 385,000 in all, will also be allowed to form associations in both states.
Despite Uber's concessions, the transportation company avoids the higher costs associated with hiring full-time workers.
The settlement puts the two largest lawsuits behind Uber, which faces litigation in other states such as Arizona and Florida.
The settlement was filed in the U.S. District Court in the Northern District of California.
