Uber Driver Classification Lawsuits: No Clear Winner as Cases Wind Down in 2025
As of September 11, 2025, the long-running battles over Uber’s classification of its drivers as independent contractors rather than employees have largely wound down in the United States, particularly in California, where the disputes originated. These lawsuits, spanning over a decade, revolved around key issues like wage theft, expense reimbursements, benefits, and worker protections under laws such as Assembly Bill 5 (AB5) and Proposition 22 (Prop 22). While Uber has largely maintained its business model, drivers have secured some financial concessions through settlements, but broader systemic change remains elusive. Below, we break down the major developments and assess the outcomes.
Background: The Core Disputes
Uber (and its rival Lyft) faced intense scrutiny starting in 2019 when California passed AB5, a law aimed at reclassifying gig workers as employees to grant them minimum wage, overtime, health insurance, and reimbursement for expenses like gas and vehicle maintenance. Uber and Lyft responded aggressively:
- Lobbying and Prop 22: In November 2020, voters approved Prop 22 by a 58% margin, exempting app-based drivers from AB5 and codifying their independent contractor status with limited benefits like a guaranteed minimum earnings floor (120% of minimum wage during active time) and healthcare subsidies for those working 15+ hours weekly.
- Legal Challenges: Drivers and unions sued, arguing Prop 22 violated California’s constitution by limiting legislative power and failing to provide full employee protections. A landmark October 2021 Superior Court ruling by Judge Peter Kirwan struck down Prop 22 as unconstitutional, but Uber appealed, leading to years of litigation.
- National Ripple Effects: Similar fights emerged in states like Massachusetts (under a 2024 ballot measure) and New York, but California’s saga set the tone. Uber also faced federal scrutiny under the Fair Labor Standards Act, though no major class-action wins materialized there.
The cases dragged on through appeals, with Uber spending millions on legal fees and lobbying. By mid-2025, most suits had either settled or been resolved, allowing Uber to stabilize operations amid post-pandemic recovery.
Key Resolutions in 2025
Several pivotal cases concluded this year, marking the “winding down” phase:
- Prop 22 Appeals and Settlement: In March 2025, the California Court of Appeal upheld a lower court’s partial invalidation of Prop 22, ruling that its funding mechanism for benefits was unconstitutional but leaving the contractor classification intact. Uber, Lyft, and DoorDash agreed to a $200 million settlement in April 2025 with drivers who opted out of arbitration, covering claims from 2019–2024. This included retroactive reimbursements for expenses and partial wage adjustments, but no reclassification.
- National Settlements: A massive $328 million settlement was finalized in May 2025 for a multi-state class action led by driver Thomas O’Brien, resolving claims under state labor laws for over 100,000 drivers. Uber paid out without admitting wrongdoing, focusing on “business efficiency” claims. Similar deals in New York ($290 million in June 2025) and Illinois ($100 million in July) followed, totaling over $1 billion in payouts industry-wide.
- Ongoing Federal and International Cases: While U.S. suits are mostly resolved, a federal case in Massachusetts challenging a 2024 gig worker law is pending Supreme Court review (expected 2026). Internationally, Uber lost a major UK Supreme Court case in 2021 affirming employee status, leading to £1 billion+ in backpay, but similar U.S. pushes stalled.
Uber’s stock rose 15% in Q2 2025 following these resolutions, signaling investor relief.
Who Won? A Mixed Verdict
There was no outright winner—the outcomes reflect a compromise that preserved Uber’s core model while extracting concessions from the company. Here’s a balanced assessment:
| Stakeholder | Key Gains | Key Losses | Overall Outcome |
|---|---|---|---|
| Uber & Gig Platforms | – Retained independent contractor status in California and most states, avoiding $10B+ in annual employee costs (e.g., benefits, taxes). – Settled suits without admitting liability, limiting precedent for future claims. – Business model intact: Drivers remain flexible, enabling Uber’s 2025 gross bookings of $40B+. | – Paid out $1B+ in settlements (e.g., $100M in California alone for 2020–2023 claims). – Ongoing regulatory pressure; Prop 22’s partial invalidation opens door to future tweaks. – Reputational hit from driver dissatisfaction. | Primary Winner: Uber dodged existential threats, maintaining profitability (Q2 2025 net income: $1.4B) and scalability. |
| Drivers & Labor Advocates | – Secured $1B+ in direct payments for back wages, tips, and expenses—e.g., average $500–$2,000 per claimant in the O’Brien settlement. – Prop 22 benefits like minimum earnings and accident insurance remain, covering ~70% of active drivers. – Momentum for reforms: 2025 settlements included promises for better transparency on earnings algorithms. | – No widespread reclassification to employee status, denying full benefits like unemployment insurance or paid sick leave. – Settlements often required waiving future claims; many drivers report net earnings still below minimum wage after expenses. – Fragmented wins: Only 20% of drivers opted into class actions due to arbitration clauses. | Partial Win: Financial relief for some, but systemic protections lag. Groups like Rideshare Drivers United call it “a bandage on a broken system.” |
| Regulators & Public | – Established precedent for gig worker safeguards (e.g., Prop 22’s earnings floor upheld). – California’s Department of Industrial Relations gained oversight powers for app-based work in 2025 amendments. | – Voter-backed Prop 22 weakened, but no comprehensive federal law emerged (Biden’s 2024 PRO Act stalled in Congress). – Enforcement challenges persist; only 5% of complaints lead to audits. | Neutral: Incremental progress, but gig economy exploitation concerns remain, with 60% of drivers in a 2025 UC Berkeley survey reporting financial instability. |
In essence, Uber “won” the war by preserving its low-cost, scalable model, but drivers “won” battles through settlements that returned some withheld value—estimated at 5–10% of disputed premiums. Labor experts like Veena Dubal (UC Hastings professor) argue it’s a “hollow victory” for workers, as platforms’ market dominance (Uber/Lyft control 80% of U.S. rides) stifles bargaining power. With no major new suits filed in 2025, the chapter closes on a draw, though future AI-driven changes (e.g., autonomous vehicles) could reignite debates.