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Here's Why Uber's $100M Settlement Is 'Disastrous' For Drivers

The future of U.S. economy is in gigs. And app-based employers such as Uber are driving it.

But, as drivers are contesting the $100 million settlement from the company versus a class action lawsuit filed against it, employee or contractor protection in such a new model remains ambigious.

Currently at center stage in Uber's many legal woes is Douglas O'Connor, who is the main plaintiff named in the class action lawsuit, "O'Connor vs. Uber."

Although the company has agreed to settle with the drivers the amount of $100 million, the drivers are not pleased, saying that, once divided, that number would barely be enough to cover each's gas expenses for a single day of work.

In addition, O'Connor himself has pulled out of the suit, saying that he only agreed to the settlement out of duress and his lawyer on the case "sold them out."

According to O'Connor, he was misled to believe that he would face sanctions from the court if he did not sign the settlement papers immediately, which is the only reason why he signed them. He has announced that he has hired new representation with Mark Geragos and Brian Kabateck, high profile Los Angeles-based lawyers.

"This proposed settlement agreement is not in my interest or in the interest of any Uber driver," he stated in new papers filed with the court to object the settlement last week. The federal court has yet to approve the terms of the settlement.

In their defense, Shannon Liss-Riordan, the original Boston-based lawyer who represented O'Connor in the case, has repeatedly defended the settlement, saying that the drivers risk getting nothing at all if they did not accept. Although she has been replaced, Liss-Riordan has stated that if her clients had chosen not to go forward with the current settlement, she would have been "more than happy to plow forward with it and do what [she needs] to do."

Many observers are watching this case closely as it could set a precedent for the emerging gig economy that will shape the future of the U.S.

Currently, Uber is based on a model where they make millions and their drivers are not their employees but independent contractors who must work long hours, at their own expense, to make a decent living using the app.

Uber is presently valued at $62.5 billion while an average Uber driver could make a gross of $118 in an 11-hour day of work.

Part of the class action lawsuit is to force Uber, and other such companies, to change the terms of their model to make their drivers employees rather than contractors. This will impact Uber's bottom line tremendously, but many drivers feel that being employees rather than contractors, freelancers, or "associates" of Uber will offer them more security and protection than they currently have.

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