Uber offers retirement plans to drivers amidst raging court battle

Uber is offering its drivers retirement plans in select cities like Seattle, Boston, Chicago and New Jersey through Betterment, an automated investment service. The ride-hailing technology startup plans to eventually expand the program nationwide, and will offer drivers the opportunity to register for Betterment directly from the Uber app.

Uber says that the new service has been designed based on driver feedback and is part of its ongoing efforts to help its drivers save money and plan for the future. “Nearly one–third of Americans have no retirement savings or pension. And research consistently shows that when people have access to a retirement account, they’re more likely to save than not,” Uber regional general manager Rachel Holt wrote in a blog post announcing the program.

Meanwhile, in the background, the company is waging a costly fight to keep drivers classified as independent contractors, arguing that it is a technology platform that connects drivers to riders, not an employer in the traditional sense. The class action lawsuit challenging that classification appeared headed toward a $100 million settlement, until last week when a judge rejected it as unfair and inadequate.

Retirement plans are typically part of an employment package. By offering the plans to drivers, Uber seems to be softening its strict stance that drivers are contractors. However, the plans won’t change drivers’ employment classification — Uber won’t match any of the fund's drivers save through the plan, as employers traditionally do.

Betterment accounts will be free to Uber drivers for one year (the investment company usually charges a small fee to maintain an account) with no minimum balance. After the first year, drivers will have to pay a discounted fee of 0.25 percent on the amount in their account.

The Uber deal may be the beginning of what Betterment said is a new segment for it to tap. The robo-adviser’s co-founder and Chief Executive Officer Jon Stein predicted potential to attract freelance workers elsewhere in the burgeoning “gig” economy.

“I’m excited about where we can take this from here because it is very much aligned with our long-term mission,” Stein said.