The smartphone app said it would back the formation of the Independent Drivers Guild for its 35,000 drivers in New York under the International Association of Machinists (IAM), a labor union representing "black car" service drivers in the city.
The agreement would "improve communication between Uber and our driver-partners, provide benefits without jeopardizing the independence and flexibility drivers love, and give drivers who have been barred from the app an additional voice in the deactivation appeals process," Uber spokesman David Plouffe said in a statement.
The new guild will not act as a union, meaning it will not enable its members to take part in collective bargaining for better pay and other benefits.
Uber refuses to recognize its drivers as employees, saying they are independent contractors.
However, the labor agreement which comes after months of negotiations is the first sign the company is easing its staunch refusal to allow drivers a voice over conditions and profits in the booming ride-sharing industry.
"The Uber-IAM agreement will ensure drivers using Uber have a higher standard of protections and support than other independent contractors," the guild said in a statement.
The five-year agreement, which sets out regular meetings between guild representatives and Uber executives, enables drivers to appeal their "deactivation" before a panel of other drivers if they feel wrongly excluded.
The provisions are similar to those Uber promised last month in the states of California and Massachusetts. The company also agreed to pay $100 million (roughly Rs. 667 crores) to end two class-action lawsuits in which drivers demanded to be classified as employees, which could have jeopardized Uber's business model.
Uber has been faced with a wave of criticism from drivers who say rate reductions and lack of benefits make it difficult for them to rely on Uber as a primary source of income.
Hundreds of drivers protested at the company's offices in New York in February.
The smartphone app has also faced stiff resistance from traditional taxi drivers the world over, who complain about unfair competition, as well as bans in some places over safety concerns and questions over legal issues, including taxes.
The New York guild said it plans to launch a fund offering drivers benefits including paid time off and retirement savings accounts.
Uber and IAM also announced plans for a joint campaign in New York to demand the government subject ride-share drivers to tax rates similar to lower rates levied on licensed taxi drivers.
Get your daily dose of tech news, reviews, and insights, in under 80 characters on Gadgets 360 Turbo. Connect with fellow tech lovers on our Forum. Follow us on X, Facebook, WhatsApp, Threads and Google News for instant updates. Catch all the action on our YouTube channel.