People have been trying to kill Uber since it was released. From prohibitive local statutes to outright lawsuits and pressure from taxi unions, the heat on Uber has not let up.
Uber Drivers Vs. Uber
Recently the company celebrated what they are choosing to see as a major win, settling two lawsuits that could have potentially done more damage than any pressure from the outside. Uber drivers wanted more rights as employees, not contract workers, so they sued.
Uber Drivers Will Remain as Contract Workers
The settlement is a victory for Uber because they didn’t have to change the status of their employees. While they do have to divvy up $100 million to about 385,000 workers, they don’t have to transition them to employees, a move that would have cost the company much more in benefits and taxes in the long run.
According to CNN reports, another stipulation of the settlement does move drivers more toward employees in action, if not in title. Drivers who step out of line will receive a warning prior to termination, something not typically required of businesses with contract workers. In addition, Uber will provide terminated drivers with an appeals process to protest their termination if they believe it was unreasonable.
Most importantly, the settlement allows Uber drivers to organize, if not unionize. These so-called “driver associations” will speak to management on behalf of workers.
A Win-Win for Uber & Drivers?
All of these concessions met drivers, who wanted employee benefits and union protection, almost exactly halfway; a decent compromise for them and a win for the business, whose model depends on low overhead. The attorney for the drivers is so happy with the agreement, she is also calling this a win.
So, is this really a win-win scenario? Possibly, maybe even probably, but public reaction will tell the tale. Will Uber drivers be happier in their work, and if so, will that translate into better customer service. In a largely unregulated business, Uber depends heavily on the attitudes of its service providers to develop its brand. The price is already right – much cheaper than typical cab fare – so if riders have a good experience, they will do well. However, if riders have to deal with out of sorts, grouchy or irresponsible drivers, Uber’s brand will suffer.
That’s why this settlement was so important to the future of Uber. Happy drivers are their business model because they will give better customer service, the only piece of the puzzle Uber doesn’t control.
Roman Temkin is an entrepreneur in NYC.