Uber agreed to pay $8.1 million to settle a class action lawsuit alleging the company violated the Fair Credit Reporting Act (FCRA) by conducting background checks on drivers without proper authorization, notice, or required legal disclosures. The settlement resolved claims that Uber failed to follow FCRA procedures when denying employment or terminating drivers based on background check results—violations that could have exposed millions of drivers to hiring discrimination and improper credit reporting practices.
For example, if Uber ran a background check on a driver applicant without obtaining written consent or providing the legally required disclosure before taking adverse action, that driver would have been part of the class eligible to claim compensation under this settlement. The case was decided in federal court in the Northern District of California, where a judge ultimately approved the settlement as “fair, reasonable, and adequate” after reviewing the evidence and the parties’ proposed compensation structure. By January 23, 2018, the settlement had received 135,209 claim forms, of which 99,243 were deemed valid by claims administrators, demonstrating that thousands of Uber drivers were directly harmed by these background check violations.
Table of Contents
- What Were the Background Check Violations Against Uber?
- The Fair Credit Reporting Act Requirements and Uber’s Failures
- Timeline of the Settlement and Court Approval Process
- Claim Submission and Payment Details
- Who Was Eligible and How Many Drivers Were Affected?
- How to File a Claim or Check the Status
- What This Settlement Means for Driver Protections Going Forward
- Conclusion
What Were the Background Check Violations Against Uber?
Uber’s background check violations centered on its failure to comply with the Fair Credit Reporting Act, the federal law that governs how employers and third parties can use consumer reports (including background checks) in hiring and employment decisions. The FCRA requires companies to obtain written authorization from an applicant before ordering a background check, provide a clear disclosure that a background check will be used in the hiring decision, and give applicants an opportunity to dispute information in the report before taking adverse action based on it. Uber allegedly skipped these critical steps or executed them improperly, subjecting drivers to background checks without their explicit consent or without giving them the legally mandated advance warning.
In practical terms, this meant Uber could have reviewed a driver’s criminal history, driving record, or other background information and then rejected the driver’s application or terminated their account without following the disclosure and dispute procedures required by federal law. Unlike hiring practices at many large corporations that have legal compliance teams reviewing their processes, Uber’s rapid scaling of its driver recruitment may have led to shortcuts in these background check procedures. A driver who was rejected or deactivated due to information in a background check they never authorized had no way to challenge the findings or correct inaccuracies before the decision was made.
The Fair Credit Reporting Act Requirements and Uber’s Failures
The Fair Credit Reporting Act was enacted in 1970 to protect consumers from inaccurate or unfair use of their personal information in credit and employment contexts. Under the FCRA, before an employer can order a background check as part of a hiring decision, the applicant must receive a clear, standalone disclosure that states a background check may be used, and the applicant must provide written authorization. Additionally, if an employer plans to take adverse action (like rejecting a candidate or terminating employment) based on information in a background check, the employer must first provide the applicant with a copy of the report and a summary of their rights before making the final decision. This gives applicants a chance to dispute false or inaccurate information.
Uber’s violations meant that many drivers never received these disclosures or did not authorize the background checks that were performed on them. Some drivers may have been terminated or prevented from using the Uber platform based on background check findings without ever being shown the report or given an opportunity to dispute what was in it. The limitation of this settlement is that it does not require Uber to rehire or reactivate drivers who were wrongfully rejected or terminated—it only provides monetary compensation for the FCRA violations themselves. Drivers who were excluded from the platform for years because of improper background checks cannot recover the income they lost during that time, only the statutory damages available under the settlement.
Timeline of the Settlement and Court Approval Process
The Uber background check case was filed in federal court in the Northern District of California, where it proceeded through litigation and eventually reached a settlement agreement that both Uber and the class of affected drivers negotiated. The settlement process included a notice phase, during which over one million potential class members were notified of the lawsuit and their rights to claim compensation through email, mail, and online notification methods. This widespread notification effort was essential because many drivers who had been subject to Uber background checks may not have known they were part of a class action or that they had potential claims.
After the notice period concluded and claims were submitted, the Federal Trade Commission and the federal court conducted a final review of the settlement terms. In October 2018, the Federal Trade Commission gave final approval to the settlement, confirming that it met legal standards and that the class members’ interests were adequately protected. The court’s approval process included evaluating whether the settlement amount was reasonable given the number of affected class members and the strength of their claims. The FTC’s involvement reflected the severity of the FCRA violations and the importance of enforcing consumer protection laws in the employment context, especially for workers in the gig economy who may be less aware of their legal rights than traditional employees.
Claim Submission and Payment Details
Class members who were subject to a background check requested by Uber before January 3, 2015, in connection with their use or sought use of the Uber App as independent transportation providers were eligible to submit claims. The settlement required all claimants to complete a claim form providing basic information about their background check and Uber account. By the claim submission deadline of January 23, 2018, a total of 135,209 claim forms had been submitted, though not all were deemed valid. After review, 99,243 claims were approved for payment, meaning the settlement administrator determined that those claimants met the eligibility criteria and were entitled to compensation.
The payment structure distributed the $8.1 million settlement fund among all approved claims, with the exact payment amount per claimant depending on the total number of valid claims received. This pro-rata distribution model is common in class action settlements and ensures that the entire settlement fund is distributed among all eligible claimants rather than going unused. However, a tradeoff of this approach is that individual payment amounts can be relatively modest—in this case, claimants would have received payments in the range of $75 to $100 or more, depending on the final calculation, though the exact per-claimant amount was not publicly disclosed in all sources. Class members who filed valid claims would have been notified by the claims administrator about their individual payment amounts and payment methods.
Who Was Eligible and How Many Drivers Were Affected?
The settlement class was narrowly defined to include only individuals who were subject to a background check requested by Uber before January 3, 2015. This cutoff date was chosen based on when Uber’s alleged FCRA violations became more widely apparent or when Uber’s practices may have changed. The class was limited to people seeking to use or using the Uber App as independent transportation providers—meaning drivers, not passengers. The threshold of 99,243 valid claims out of over one million notifications suggests that while many drivers were notified of the settlement, not all chose to submit claims, either because they were not aware of their eligibility, did not remember having a background check performed, or did not believe they had been harmed.
One limitation of this settlement is that it only covers background checks ordered before January 3, 2015, leaving drivers who experienced FCRA violations after that date without recourse under this particular settlement. Additionally, the settlement process required drivers to actively submit claim forms; those who did not file claims received no compensation, even if they were eligible. Given that this settlement was finalized in 2018 and the cutoff was 2015, many drivers may have moved on from Uber or forgotten about their background check experiences by the time they received notification. The settlement’s success in obtaining 99,243 valid claims from over one million notified individuals reflects the challenge of reaching class members in the gig economy, where driver turnover is high and contact information may change frequently.
How to File a Claim or Check the Status
For drivers who were part of this settlement, the claims process required submitting a claim form during the open claims period, which closed on January 23, 2018. The settlement administrator handled all claim submissions and maintained records of approved claims and payment schedules. Anyone who was subject to a background check by Uber before the January 3, 2015 cutoff date and was notified of the settlement could have filed a claim by providing basic information about their Uber background check and account.
The notification materials sent to potential class members included detailed instructions on how to submit a claim, either by mail or online, along with a claims phone line for questions. For those who may have missed the claims deadline or want to verify whether they were part of this class, checking the settlement status would require contacting the claims administrator or reviewing the final settlement documents filed in the federal court case. Settlement records are typically available through the court’s electronic filing system or through PACER (Public Access to Court Electronic Records). However, because the claims submission period closed in January 2018, no new claims are being accepted for this particular settlement, and anyone who did not submit a timely claim is no longer eligible to receive compensation.
What This Settlement Means for Driver Protections Going Forward
The Uber background check settlement represents an important enforcement action against a major gig economy platform, establishing that gig workers like drivers are entitled to the same FCRA protections as traditional employees. The Federal Trade Commission’s involvement and approval of the settlement signaled that federal regulators were taking seriously the treatment of gig workers and the importance of proper background check procedures in the on-demand economy. Following this settlement, Uber and other platforms became more conscious of the need to follow FCRA procedures, including providing proper disclosures and authorization forms before conducting background checks and before taking adverse action based on background check results.
However, the settlement also highlighted gaps in worker protections for gig economy participants, as independent contractors like Uber drivers traditionally had fewer legal protections than employees. This settlement helped narrow that gap by applying consumer protection laws to gig economy background checks, but the gig economy continues to evolve, and new questions arise about how background checks, algorithmic decision-making, and account deactivation practices should be regulated for app-based workers. The settlement’s $8.1 million award, while substantial, also raises questions about whether financial penalties alone are sufficient to deter large platforms from cutting corners on compliance, or whether stricter regulations and oversight are needed.
Conclusion
Uber’s $8.1 million settlement for Fair Credit Reporting Act violations during background checks demonstrates the legal vulnerabilities that ride-sharing platforms and other gig economy companies face when they fail to follow consumer protection laws. The settlement compensated over 99,000 eligible drivers for Uber’s improper background check practices, including failures to provide required disclosures, obtain proper authorization, and give drivers an opportunity to dispute inaccurate information before adverse action was taken. The federal court’s approval and the FTC’s final acceptance of the settlement confirmed that the terms were fair and reasonable given the scope of the violations and the number of affected class members.
If you were a driver who was subject to a background check by Uber before January 2015 and received notification about this settlement, you would have needed to file a claim by January 23, 2018, to receive compensation. For those who may have missed the deadline or want to verify their claim status, consulting the settlement documents or contacting a consumer attorney familiar with gig economy employment law may provide additional guidance. This settlement serves as a reminder that companies operating in the gig economy are still bound by federal consumer protection laws and that workers have legal remedies when those laws are violated.