Uber has agreed to pay $3 million as settlement for a class action suit that was brought forward by its drivers. The ride-hailing service was accused of docking excessive fees from driver’s fares in the suit that was filed in a New York Court. Uber confirmed that the preliminary settlement had been filed with the federal court on Monday. The class action suit was originally filed at the beginning of 2016.
The suit covers all Uber drivers since December 2009 within the city of New York. Uber drivers in the city felt that the ride-hailing service had breached their terms of agreement after it started to charge the NY sales tax as part of the service fees. The ride-sharing company was also accused of deducting a state workers compensation fund surcharge that is commonly known as the “Black Car Fee.”
These charges had a significant effect on the fees owed to Uber. The suit noted that the drivers had to pay more in service fees compared to other counterparts in other cities. The drivers accused the ride-hailing service of fake advertising too. They say that the company promised to offer guaranteed compensation.
However, Uber refused to accept any wrongdoing. A report by Reuters noted that the company denied all allegations but decided to settle in order to avoid the cost and inconvenience of litigation. Nonetheless, the settlement details are still scanty and it seems that Uber has decided to keep this matter low key. The ride-sharing service has not responded to this developing story and our efforts to get a comment at the time of writing this article fell on deaf ears.
Driver related complaints are not new to Uber. In January of last year, the ride-hailing service settled for $20 million in an FTC complaint where it was accused of deliberately misleading drivers on the earnings potential arising from its service. Just a few months later, Uber also agreed to part with $80 million designed to compensate about 96,000 drivers in New York City. The company openly admitted at the time that it had inadvertently underpaid the drivers for a period of about two and a half years.
Legal trouble continues to follow the company even overseas. Recently, Uber lost an appeal with the employment tribunal in the UK contesting the designation of its drivers as workers and not self-employed contractors. The decision will now make it mandatory for Uber to fund workers’ benefits and rights which could lead to more operational costs.
The UK is one of the most lucrative markets for Uber and maintaining its foothold there is very important. Uber also paid $100 million in April last year in a settlement with over 385,000 drivers and another $7.5 million to settle a lawsuit on background checks for drivers. The company was accused of obtaining driver’s personal information without their consent.