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Uber to Pay Up to $100M to Settle Suit Over Driver Status

The class action suit was filed over whether Uber's California drivers are employees or independent contractors.
Image: The logo of car-sharing service app Uber
The logo of car-sharing service app Uber on a smartphone over a reserved lane for taxis in a street is seen in this December 10, 2014 file photo illustration.SERGIO PEREZ / Reuters, file

SAN FRANCISCO — Ride service Uber has agreed to pay up to $100 million to settle a class action lawsuit over whether its California drivers are employees or independent contractors, resolving a major challenge to its business model.

The settlement maintains Uber drivers as independent contractors, even though the lawsuit had alleged that Uber drivers are employees entitled to reimbursement of expenses.

Out of the $100 million proposed payment, $84 million is guaranteed to drivers and $16 million is contingent on an increase in Uber's value.

Uber announced some changes in its business practices, including the institution of a policy for deactivation of drivers, chief executive Travis Kalanick said in a blog post about the settlement.

Uber is "pleased" that the deal "recognizes that drivers should remain as independent contractors, not employees," Kalanick said in the post.

The settlement must be approved by a San Francisco federal judge.