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

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.

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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.

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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.