Business & Tech

Uber drivers say $84m settlement is too timid

Uber driver Dean Johnson waited for a customer outside South Station on Friday.
Craig F. Walker/Globe Staff
Uber driver Dean Johnson waited for a customer outside South Station on Friday.

Lawyers for Uber drivers cheered their $84 million settlement with the ride-hailing company this week as a landmark win that will make it easier for drivers in Massachusetts and California to earn a living.

A number of Boston-area drivers who spoke with the Globe, however, weren’t convinced.

To begin with, most didn’t realize that the agreement probably applies to them. Others complained that the deal failed to extract any meaningful concessions from Uber. And while frequent drivers could receive around $4,000, many were upset to learn that they are likely to receive only modest payments of a few hundred dollars, while drivers in California would get about twice as much.

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“A friend of mine asked me, ‘What happens with that 100 million? Who gets it?’ ” said Berhanu Shelkute, who drives up to 14 hours a day for Uber. “Not me.”

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If it’s approved by a judge in June, the agreement announced Thursday would end lawsuits that claimed Uber misclassified drivers in Massachusetts and California as independent contractors instead of employees entitled to benefits and other protections. The case was led by well-known Boston-based labor lawyer Shannon Liss-Riordan.

Under the settlement, Uber would pay $84 million to drivers — $100 million if the company goes public later on — in proportion to how many miles each drove. The company also agreed to stop removing drivers that refuse too many potential fares from its network, to only “deactivate” drivers for violating specific clauses in a new driver policy, and to stop suggesting to passengers that tips are included in the fares (they aren’t).

Drivers who believe they have been deactivated for no good reason could appeal their cases. They also will be able to join Uber-recognized “Driver Associations,” pseudo-unions that will meet quarterly with Uber.

Massachusetts Uber drivers said those changes were positive, especially the protection from permanent deactivation for having a low ride-acceptance rate. But the biggest problem, they said, remains unaddressed: Uber takes a hefty 20 percent to 25 percent cut of fares that are already too low.

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“I’m really unhappy with the rates,” said driver Duane Mitchell, 63. “They’re so low I can barely justify going out.”

Mitchell and most of the other drivers who spoke with the Globe said they are driving more for competitors such as Lyft or Boston-based Fasten, which is aggressively recruiting drivers by promising to let them keep more of the fares. The only advantage Uber offers, they said, is a larger customer base.

Liss-Riordan admitted low driver pay is a problem but said it would have been hard sue just on those grounds. She also acknowledged that each California driver is set to receive nearly double what a Massachusetts driver would get, thanks to differences between the states’ laws and because that case was further along.

Still, Liss-Riordan defended the deal, saying it was the best one possible given the uncertainties of continuing to trial. She argued that it solves several issues drivers have long complained about and noted that the Driver Associations provide a means for drivers to keep fighting for further improvements. The settlement could also increase drivers’ incomes, she said, because it allows drivers to place signs in their vehicles explaining that tips are not included.

Some drivers, however, said signs asking for tips will only anger passengers. They want the Uber app to include an option to add tips, something the company told the Globe it is not considering.

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“A sign would be a huge turn-off for passengers. They’ll say, ‘Wow, this guy really has nerve,’ ” said Ben Dahdah, a 55-year-old driver who called the settlement “meaningless.”

Unless Uber explains the tip policy to customers, he said, “they would see it as drivers being greedy and give us bad ratings.”

Liss-Riordan said she is asking the judge for a 25 percent cut of the settlement, or about $21.75 million, to cover her team’s costs. Drivers will receive e-mails later this year explaining how to apply for their share, she said.

Globe correspondent Amanda Burke contributed to this report. Dan Adams can be reached at dadams@globe.com. Follow him on Twitter @DanielAdams86.