Uber reaches $3 million settlement with New York drivers over fees

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Uber Technologies Inc agreed to pay up to $3 million to settle a proposed class-action lawsuit brought on behalf of 2,421 drivers in New York who accused the ride-sharing company of docking excessive fees from their fares.

A preliminary settlement was filed on Monday with the federal court in Brooklyn, New York, and requires approval by U.S. District Judge Nicholas Garaufis.

Drivers accused Uber of breach of contract for including sales tax and a “Black Car Fund” fee, which relates to workers’ compensation, in fares when calculating service fees, thereby increasing the amounts owed.

They also accused Uber of false advertising for allegedly offering guaranteed compensation without disclosing the conditions, such as in an ad telling drivers they could “DRIVE & MAKE $5,000 Guaranteed” in their first month behind the wheel.

The San Francisco-based company denied all allegations, and settled without admitting wrongdoing to avoid the cost and inconvenience of litigation, according to the settlement.

Uber did not immediately respond on Tuesday to requests for comment.

The settlement covers Uber drivers who have used the Uber app to arrange rides in New York since Dec. 29, 2009, and whose claims are not subject to arbitration.

It follows Uber’s agreement to pay more than $80 million to roughly 96,000 drivers in New York, after the company admitted in May to having inadvertently underpaid drivers for two-and-a-half years, court papers show.

Monday’s settlement also calls for the dismissal of claims that Uber misclassified drivers who used the Uber app as independent contractors.

Lawyers for the drivers may collect fees equal to as much as one-third of the settlement fund.

The case is Ortega et al v Uber Technologies Inc et al, U.S. District Court, Eastern District of New York, No. 15-07387.