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Uber Technologies Inc.’s $10 million settlement with women engineers who complained they were underpaid compared with men would also rid the ride-hailing giant of liability for potentially hundreds of sexual harassment incidents over the past five years.
The accord, which is up for a judge’s approval Tuesday, covers almost 500 women and people of color in an October class action alleging the company paid them less than their peers and didn’t promote them as frequently as males, whites and Asians. Harassment claims were added last month and Uber said in a court filing the same day that it agreed to resolve the case without any admission of wrongdoing.
In addition to providing almost $5 million to remedy pay disparities and as much as $3 million for plaintiffs’ attorneys, the deal creates a $1.9 million fund to compensate harassment victims who file detailed reports on how they were mistreated.
Uber was pilloried over its toxic culture last year when former engineering employee Susan Fowler published a blog post alleging that she was sexually harassed and that her complaint was mishandled. That led the startup to commission outside investigations that turned up more than 200 human-resources claims and resulted in more than 20 people being fired.
A lawyer who negotiated the settlement on behalf of employees said he’s confident the deal will pass muster in court. “This is an excellent result for class members,” said Jahan Sagafi.
An Uber spokesman said the accord “fairly addressed the concerns that were raised and we are confident the court will allow it to proceed in a just and fair manner.”
Any current or former employee who doesn’t like the terms can opt out and preserve their individual right to pursue legal action. But if more than 5 percent of the covered workers opt out, Uber reserves the right to withdraw from the settlement.
An attorney who represents companies in employment disputes said he expects the settlement will raise concerns when it’s reviewed by U.S. District Judge Yvonne Rogers Gonzalez in Oakland, California.
“It’s entirely possible the court may reject this,” said Jim Evans, of Alston & Bird in Los Angeles, who isn’t involved in the case. The judge may find the accord is too broad and the amount of money too small, he said. “It just depends on the court’s perception of fairness. It will depend on the judge’s interpretation of how many people are affected by this class settlement.”
Some of Uber’s previous settlements with customers and drivers have been faulted by judges as inadequate, forcing the company back to the drawing board to re-negotiate or continue litigating with the attorneys who brought the class actions. In January, Uber finally satisfied a Los Angeles judge who had twice withheld approval of a deal over the company’s contractor-based business model. The state judge finally signed off on the agreement, in which Uber said it would pay $7.75 million, offering 1.6 million California drivers an average of $1.08 each.
Like the drivers’ case in Los Angeles, Sagafi’s complaint was brought under a California law that gives employees the right to step into the shoes of the state labor secretary to bring enforcement actions over labor code violations. He said workers bringing harassment claims would ordinarily be required under their contracts to resolve disputes through arbitration. But complaints based on the state’s Private Attorneys General Act can’t be forced into arbitration, he added.
The portion of the settlement earmarked for alleged violations of equal-pay laws going back to 2013 would pay out an average of about $10,000 per employee, with exact amounts varying according to job title and tenure, as well as location of employment. In July, months before the lawsuit was filed, Uber said that it adjusted salaries to ensure equity in pay for women and minorities.
Sagafi, whose law firm Outten & Golden LLP represents the two women who brought the case, said he has no way of knowing how many employees will file harassment claims. In a court filing last week, he outlined a hypothetical scenario in which 100 people filing claims would yield an average payout of $19,000 a person.
Victims would be asked on a claim form to describe each incident as specifically as they can, including who the perpetrator was, who witnessed the incident and whether Uber took action in response to any complaint to either the company or a government agency. The amount to be awarded to any individual would be determined by a settlement administrator using a point system.
The settlement caps individual payments at $100,000 barring exceptional circumstances and says that payouts to victims for emotional distress may be subject to income tax.
Evans, the employment lawyer who isn’t involved in the case, said it’s “very encouraging” that the settlement includes a commitment by the company to “at least start to change its business environment.” That includes provisions promising regular reports on Uber’s diversity metrics for three years, as well as a pledge to work with a consultant to address the company’s job classification and compensation system.
But Evans voiced concern over how the settlement is structured and the broad scope of claims beyond pay equity for which Uber is being released from liability. He also questioned the provision that calls for each sexual harassment claim to be valued by a case administrator acting independently of the court.
“It wouldn’t surprise me to see the court jettison” the part of the settlement that addresses sexual harassment, he said.
Sagafi responded that “this is the way claims are evaluated in a settlement context.”
It’s too early for employees to formally object to the settlement. The lawyers first need to win preliminary approval from Gonzalez so that all eligible workers can be notified about the terms of the agreement.
The case is Del Toro Lopez v. Uber Technologies Inc., 4:17-cv-06255, U.S. District Court, Northern District of California (Oakland).
©2018 Bloomberg L.P.