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File illustration picture showing the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014. A Frankfurt court earlier this month instituted a temporary injunction against Uber from offering car-sharing services across Germany. San Francisco-based Uber, which allows users to summon taxi-like services on their smartphones, offers two main services, Uber, its classic low-cost, limousine pick-up service, and Uberpop, a newer ride-sharing service, which connects private drivers to passengers - an established practice in Germany that nonetheless operates in a legal grey area of rules governing commercial transportation. REUTERS/Kai Pfaffenbach/Files (GERMANY - Tags: BUSINESS EMPLOYMENT CRIME LAW TRANSPORT)

Uber Offers Drivers $1 Each

Uber is offering its drivers an average of about a dollar apiece to dispose of alleged labor code violations that their own lawyer said might be worth billions.

The company asked a state judge in Los Angeles Wednesday to approve a $7.75 million settlement to resolve claims stemming from the company’s refusal to give California drivers the protections and benefits of employees. The accord doesn’t require Uber to stop classifying the drivers as independent contractors.

The claims by Steven Price, who sought to represent as many as 1.6 million California drivers in a class action, were brought under the state’s Private Attorneys General Act, or PAGA, which gives employees the right to step into the shoes of the state labor secretary to bring enforcement actions. Under the 2004 law, the state keeps 75 percent of any penalties won.

The Price case poses a special threat to Uber. The company in September won an appeals court ruling that potentially eviscerated a more advanced class action in San Francisco federal court by forcing the vast majority of 385,000 California and Massachusetts drivers in the case to proceed through arbitration one at a time. But PAGA claims, like those filed by Price in state court, can’t be shunted into arbitration.

What is PAGA?

California’s Private Attorneys General Act (“PAGA”) allows an “aggrieved employee” to bring a lawsuit on behalf of him/herself and other current and former employees for Labor Code violations including those related to wage and hour. The Act permits the employee to act as the private attorney general in the place of the Labor and Workforce Development Agency (LWDA) and to initiate a representative action to collect penalties for labor code violations.



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