Uber has agreed to pay $100 million to settle a class action lawsuit in two U.S. states in a closely-watched case that could have threatened the taxi hailing app's business model.
The lawsuit revolved around whether Uber drivers in California and Massachusetts were classed as contractors or employees, in which case they would be entitled to other benefits, driving the taxi start-ups costs higher.
As part of the settlement, the two sides agreed that the drivers will remain contractors, not employees, a good result for Uber and one likely to be welcomed by others start-ups in the on-demand economy.
The $100 million settlement is made up of an $84 million payment to the roughly 385,000 drivers involved in the cases. A second payment of $16 million will be handed out if Uber goes public and the valuation of the company increases one and a half times from its December 2015 financing valuation with the first year of the initial public offering.
Uber is the world's most valuable private technology start-up worth over $62 billion.