(Bloomberg) -- Uber Technologies Inc. reached a settlement offering its drivers an average ofabout a buck apiece to dispense with alleged labor-code violationsthat their lawyer claimed might have been worth billions ofdollars.

The ride-hailing company, along with the drivers’ lawyer, askeda state judge in Los Angeles Wednesday to approve a $7.75 millionagreement to resolve claims stemming from its refusal to giveCalifornia drivers the protections and benefits of employees. Theaccord allows Uber to keep classifying the drivers as independentcontractors.

The claims by Steven Price, who sought to represent as many as1.6 million California drivers in a class action, were broughtunder the state’s so-called bounty hunter law, which givesemployees the right to step into the shoes of the state laborsecretary to bring enforcement actions. Under the 2004 PrivateAttorneys General Act, or PAGA, the state keeps 75 percent of anypenalties won. The remaining 25 percent is a reward for the workerswho bring the case. Thousands of such lawsuits have been filed inthe past 12 years.

The Price case poses a special threat to Uber. The company inSeptember won an appeals court ruling that potentially eviscerateda more advanced class action in San Francisco federal court byforcing the vast majority of 385,000 California and Massachusettsdrivers in the case to proceed through arbitration one at a time.But PAGA claims, like those filed by Price in state court, can’t beshunted into arbitration.

Christopher Morosoff, a lawyer representing Price, said at aJune hearing in San Francisco that his case cited 17 labor codeviolations, compared with just two claims — tips and mileage— in the federal case for which the PAGA penalties wereestimated at $1 billion by the state agency that oversees laborcode enforcement.

‘Do the math’

“Do the math there,” he told U.S. District Judge Edward Chen at thetime. “The numbers may be staggering, and they may be in thebillions, and you may not want to look at them, but they arereal.”

In Wednesday’s filing, Morosoff and attorneys for Uber urged theLos Angeles judge to approve the accord, calling it a “reasonableand fair compromise” and “the largest PAGA settlement ever,exceeding all other known PAGA settlements by millions ofdollars.”

“This settlement appropriately balances the objective of thePAGA statute and the risks of litigation posed to each side, whileavoiding an unjust result,” they wrote.

PAGA penalties

After attorney fees and administration costs are deducted, theagreement provides for about $1.7 million to paid to drivers andearmarks about $2.9 million in PAGA penalties for California’sLabor and Workforce Development Agency. The amount each driver getswill depend on how many weeks they have actively driven forUber.

An Uber spokeswoman said the company is pleased with thesettlement and looks forward to resolving other cases. Morosoffdidn’t immediately respond to a call seeking comment.

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Uber said in a court filing that the Price settlement wouldresolve PAGA claims of drivers who used its app from July 8, 2013,until the date a Los Angles judge signs off on the deal.

Court approval of the accord isn’t a sure thing. In the SanFrancisco case, which would have resolved claims for tips andmileage valued by the drivers’ lawyer at $852 million, Chenrejected a $100 million settlement in August. He said the $1million allotted to resolve PAGA claims was inadequate in light ofthose claims being valued at as much as $1 billion.

Overtime claims

Shannon Liss-Riordan, the lawyer representing drivers in the SanFrancisco case, was criticized by Morosoff, who said she folded tooeasily to Uber in her settlement on minimum-wage and overtimeclaims, which the deal valued at zero.

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Liss-Riordan, complaining that she was left in the dark aboutthe Price settlement until it was first disclosed in November,tried unsuccessfully to get Chen to try to wrestle the PAGA claimsaway from the Los Angeles case so she could pursue them in SanFrancisco. Chen said in an order that he was reluctant to interfere“with a state court’s resolution of what is, after all, a state lawissue.”

‘Forum shopping’

Liss-Riordan said the Price settlement is evidence of Uber’s “forumshopping,” testing different courts to find the most favorableoutcome.

“It is looking for a judge who will approve a far smallersettlement than I had last year, which the federal court declinedto approve,” Liss-Riordan wrote in an e-mail. “Now Uber is tryingto get a settlement approved in state court for a lower amount forthe PAGA claims than Judge Chen said he would not approve, butwithout the drivers getting the benefit of the far largersettlement that I was able to negotiate.”

Charlotte Garden, a Seattle University associate law professorwho has followed the Uber litigation, called the settlement a“bargain” for Uber, saying it appears to be proportionally smallerthan the sum than Chen signaled that he would have approved in theSan Francisco case.

The professor also said that if the Price settlement isapproved, it will advance the company’s “divide and conquer”approach to driver lawsuits.

Related: Uber driver was employee, not contractor,California labor commissioner says

It may reduce the threat of the San Francisco lawsuit to the“nuisance value” of fighting potentially thousands of individualdrivers in arbitration, she said. While that cost could still beconsiderable because Uber has committed to covering the expenses ofarbitration, “it will almost certainly be less than a case with aviable path towards litigating all the drivers’ claims on anaggregate basis,” Garden said.

The Los Angeles case is Price v. Uber TechnologiesInc., BC554512, California Superior Court, Los Angeles County(Los Angeles). The San Francisco case is O’Connor v. UberTechnologies Inc., 13-cv-03826, U.S. District Court, NorthernDistrict of California (San Francisco).