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Uber will pay $20 million in lawsuit over driver pay claims

Uber has used promises of good pay and flexible hours to attract drivers to its growing ride-hail service. Now, it says it is willing to spend millions to settle a lawsuit with a federal agency over allegations it exaggerated just how much people could make by driving for the ride-hail service.

The heart of the claims: The Federal Trade Commission says Uber offered inflated hourly earning figures for potential drivers. Uber doesn't admit or deny the activities alleged in the lawsuit.

  • The FTC alleges that the company used inflated figures in job advertisements. It says, for example, that fewer than 20% of drivers in Washington, D.C. earned the $21 per hour wage advertised by the company on Craigslist.
  • The FTC's suit says that drivers in the key markets of New York and San Francisco brought in substantially less than the yearly income mentioned in a company blog post for those cities.
  • The government also says Uber misrepresented the terms of leases it offered on vehicles.

What Uber's agreeing to: The company will pay $20 million and is forbidden from making certain misrepresentations or unsubstantiated claims in the future.

Quote"We've made many improvements to the driver experience over the last year and will continue to focus on ensuring that Uber is the best option for anyone looking to earn money on their own schedule." — Uber spokesperson

Why this matters: The suit fits into a national debate over Uber's relationship with its workers, who are contractors and don't receive some of the protections often associated with traditional, full-time employment. The company says, however, that they've created an innovative way for people to earn money while working on their own schedule.

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