A California federal judge has rejected Uber Technologies Inc.’s proposed $100 million wage and hour class action settlement with Uber drivers who say they were stiffed on tips and other expenses.

In his order denying preliminary approval of the Uber class action settlement, U.S. District Judge Edward M. Chen ruled that the proposed deal was not fair, adequate and reasonable to the driver plaintiffs.

The judge found that an arbitration provision included in the proposed settlement agreement may unfairly benefit Uber and deserves further consideration before he could determine the deal was worthy of approval.

The proposed Uber settlement would have resolved two class action lawsuits that allege Uber misclassified its drivers as independent contractors instead of employees, thus denying drivers certain protections offered under the California Labor Code.

The California Labor Code requires employees be reimbursed for certain expenses, such as fuel and other costs associated with using their vehicles.

The plaintiffs also argue that Uber misrepresented to its customers that gratuity was included in the fare, even though drivers did not receive the full amount of the advertised gratuity. The plaintiffs claim that this failure to provide drivers with the full gratuity amount as represented to customers, violated California’s Unfair Competition Law.

Uber argued against the drivers’ claims, stating that its drivers cannot be considered employees because the drivers have control over their own hours and work schedule.

The plaintiffs dispute this assertion, arguing that Uber has considerable control and supervision over the drivers, thus making the drivers employees of Uber.

The judge previously certified for settlement purposes a Class of all drivers in California and Massachusetts who used the Uber app since Aug. 16, 2009 until the date of preliminary approval of the Uber class action settlement

Under the terms of the proposed Uber driver misclassification class action settlement, Class Members would be eligible to receive compensation based on the number of miles driven for Uber.

The deal would not change the independent contractor designation for Uber drivers, but would provide them with additional benefits and protections.

Uber also agreed to publish a clear deactivation policy and only allow driver deactivation for sufficient cause. Low passenger acceptance rates would not be grounds for deactivation, though drivers who have high rates of cancelling fares after accepting them may be subject to deactivation.

Uber also agreed to provide at least two warnings before deactivating drivers for reasons other than discrimination, fraud, illegal conduct or safety issues. Deactivated drivers will be provided an explanation of the reason for their deactivation, according to the proposed Uber settlement.

A number of disgruntled Uber drivers were opposed to the proposed Uber settlement because they believe it will not improve their working conditions. They also argue that they will not be compensated fairly.

Judge Chen ordered the parties to confer about how to proceed with a motion filed by Uber to stay the litigation. A status conference regarding the Uber class action lawsuits has been scheduled for Sept. 15.

The Uber drivers are represented by Shannon Liss-Riordan and Adelaide Pagano of Lichten & Liss-Riordan PC and Matthew D. Carlson of Carlson Legal Services.

The Uber Driver Class Action Lawsuits are O’Connor, et al. v. Uber Technologies Inc., et al., Case No. 3:13-cv-03826, and Hakan Yucesoy v. Uber Technologies Inc., et al., Case No. 3:15-cv-00262, in the U.S. District Court for the Northern District of California.

UPDATE: May 2019, the Calif., Mass., Uber driver misclassification class action settlement is now open. Click here to file a claim.