Uber will pay up to $100 million to drivers who had sought to be classified as employees, settling two lawsuits that posed a threat to the company’s on-demand business model, which relies on independent contractors.
The San Francisco ride-hailing company Thursday evening announced it will pay an initial sum of $84 million to settle cases in California and Massachusetts to some 385,000 drivers.
The settlement brings to a close what employment experts believe was the biggest existential threat to the fast-growing start-up.
Uber built its high valuation on a system that uses independent contractors, enabling the company to avoid covering driver expenses such as gas and mileage, or providing benefits such as health insurance, Social Security, overtime or sick days.
Recognizing its drivers as employees would have bitten into its margins -- and potentially slowed its global expansion and raised fares.