Judge Rejects Uber's Settlement in Driver Classification LawsuitThe $84 million payout agreed in April fell far short of the drivers' claims, a federal judge ruled.

A federal judge in San Francisco today rejected a settlement in aclass-action lawsuitagainst Uber, ruling that it was not fair to drivers who petitioned to be classified as employees instead of independent contractors.

The settlement, reached in April, would have required Uber to pay as little as $84 million to approximately 385,000 current and former drivers in California and Massachusetts. US District Court Judge Edward Chen ruled that amount to be far lower than the full value of the drivers' claims,Reutersreported.

In filing the class action, the drivers claimed that they are Uber's employees and should be reimbursed for expenses like gas, fees and tolls. Uber, meanwhile, maintained that it's a technology company, providing a service to drivers and riders, and not a taxi company that employs drivers directly.

As part of the settlement, both sides agreed that drivers would remain independent contractors, not employees. In addition to the initial $84 million payment, Uber would have to pay out an additional $16 million if the company goes public and its valuation increases by more than half within the first year of its initial public offering.

Under the settlement, Uber would also have to provide drivers with more information about their individual ratings and be more transparent about its policy for deactivating drivers. Finally, Uber agreed to create and fund a "driver's association" in both states, and meet with them quarterly to discuss any issues.

After today's ruling, Uber said in a statement toReutersthat it believed the settlement was fair and reasonable.

"We're disappointed in this decision and are taking a look at our options," the company said.