Ride-hailing giants, Uber and Lyft, have agreed to pay a combined sum of $328 million to settle New York Attorney General, Letitia James’, allegations that the companies systematically withheld pay and benefits from their drivers.
The settlements come following a multi-year investigation into their practices. Under the agreement, Uber will pay $290 million, while Lyft pays $38 million, bringing resolution to the protracted investigation into their labour practices. The settlements include provisions to guarantee minimum hourly rates for drivers, offer paid sick leave, and provide notices and in-app chat support to address drivers’ questions regarding their earnings and working conditions.
Over 100,000 current and former drivers in New York stand to benefit from the settlement, which aims to ensure that they receive the pay and benefits legally entitled to them. The New York Attorney General hailed the settlements as the largest wage theft settlement in her office’s history, marking a significant milestone in the battle for fair compensation in the gig economy, which represents labour markets that rely heavily on temporary and part-time positions filled by independent contractors and freelancers.
Both Uber and Lyft have faced allegations on a national scale about them consistently underpaying drivers, particularly immigrants, by classifying them as independent contractors rather than employees.
The investigation found that both companies had wrongly deducted sales taxes and fees for a workers’ compensation fund from drivers’ earnings, which passengers should have covered. Uber’s alleged violations took place between 2014 and 2017, while Lyft’s occurred from 2015 to 2017.
Furthermore, both companies were accused of denying drivers the right to sick leave, a benefit legally mandated for state and New York City employees.
The investigation stemmed from concerns raised by the New York Taxi Workers Alliance, representing around 21,000 drivers of various types of vehicles, including yellow taxis, green cabs, app-based rideshare services, and corporate cars.
The terms of the settlement state that drivers outside New York City will be entitled to a minimum hourly rate of $26 for rides, along with paid sick leave, which will be subject to annual inflation adjustments.
In New York City, where the Taxi and Limousine Commission already mandates minimum pay and some paid time off for drivers, Uber and Lyft drivers will receive $17 per hour for sick leave, along with inflation adjustments.
The settlements represent a significant step towards ensuring fair compensation and benefits for gig economy workers and could have broader implications for the industry as a whole.