Judge rejects Uber’s settlement with drivers over employee classification

A federal judge in California rejected a proposed settlement between Uber Technologies and drivers in Massachusetts and California in lawsuits that claimed that they should be classified as employees with full benefits rather than as independent contractors.

The ride-hailing company has insisted that its model, based around freelance contractors over whom it says it has minimal control, gives drivers flexibility to choose when to work and be their own bosses. Recognizing the drivers as employees would require the ride-hailing company to pay them benefits, which would push up its cost of operation.

The rejection of the settlement in the class-action suit could hence have a potential fallout on the entire on-demand economy, which depends to a great extent on using contract workers rather than employees. For now, the settlement seems to be stuck over the amount, including the payout under a California labor law. The parties have been asked to hammer out a way to proceed with the case and submit it to the court  next month.

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