Uber and Lyft have reached a significant $328 million settlement with New York’s attorney general, Letitia James, resolving allegations that both ride-sharing giants systematically deprived drivers of fair wages and benefits.
This historic agreement, deemed the largest wage theft settlement in the attorney general’s history, will see Uber paying $290 million, while Lyft will pay $38 million.
The investigation primarily centered on claims that Uber and Lyft wrongly collected taxes and fees from drivers in New York, rather than from passengers.
Over 100,000 current and former drivers in the state will benefit from the settlement.
Additionally, drivers will now be guaranteed minimum hourly rates and paid sick leave, along with improved communication channels through in-app chat support to address concerns about their earnings and working conditions.
Shannon Liss-Riordan, a lawyer representing numerous Uber and Lyft drivers, described the settlement as monumental, potentially setting a precedent for other states seeking to protect the rights of drivers.
Furthermore, this resolution marks the end of the debate over whether drivers should be classified as independent contractors or employees.
Uber and Lyft have consistently defended their classification of drivers as independent contractors. Despite denying wrongdoing, both companies hailed the settlement as a victory for drivers.
Following the announcement, the stock prices of Uber and Lyft experienced notable increases, with Uber rising by up to 6.3% and Lyft by up to 9.2%.
Uber’s chief legal officer, Tony West, asserted that this settlement would serve as a model for other states.
In response to the settlement, Uber and Lyft emphasized that many of their drivers prefer the flexibility of working as independent contractors.
The payments made by both companies as part of this settlement amount to less than 1% of their annual revenues.
The alleged violations by Uber occurred between November 2014 and May 2017, while Lyft’s transgressions took place from October 2015 to July 2017.
Both companies were also accused of denying drivers sick leave, which is a legal entitlement for state and New York City employees.
This settlement ensures that drivers finally receive the compensation and benefits that they are rightfully owed under the law, according to Attorney General Letitia James.
In a separate arrangement, Uber agreed to make quarterly payments to a state insurance fund to provide benefits for unemployed drivers, although the exact amount was not disclosed.
Under the terms of the settlement, drivers outside New York City will receive a minimum of $26 per hour during rides and for sick leave, subject to annual inflation adjustments.
In New York City, where drivers already receive minimum pay and some paid time off as mandated by the Taxi and Limousine Commission, Uber and Lyft drivers will now receive $17 per hour for sick leave, also adjusted for inflation.