Ride-sharing giants Uber and Lyft have reached a groundbreaking settlement in New York, agreeing to pay a combined total of $328 million to address accusations of systematic underpayment of drivers and the denial of mandatory paid sick leave. According to Reuters, this agreement, announced by New York Attorney General Letitia James, is being hailed as the largest wage theft settlement in the history of her office.
Under the terms of the settlement, Uber will pay an impressive $290 million, while Lyft will contribute $38 million, in order to resolve the multi-year investigation initiated by the attorney general’s office. More than 100,000 current and former drivers in New York State will now receive both settlement funds and essential benefits as part of the agreement.
New York Attorney General James emphasized that this settlement will ensure that drivers finally receive what they are owed and entitled to under the law. The investigation was prompted by concerns raised by the New York Taxi Workers Alliance, which revealed that Uber and Lyft often misclassified their drivers as independent contractors instead of employees, resulting in lower pay and the denial of essential benefits.
This settlement addresses several key issues, including the alleged improper deduction of sales taxes and workers’ compensation fees from drivers’ payments. CNBC reports that Uber’s infractions occurred between 2014 and 2017, while Lyft’s misconduct extended from 2015 to 2017. Additionally, both companies were found to have denied drivers the paid sick leave mandated by the state and New York City.
The settlement also includes important provisions to protect drivers’ rights. Outside of New York City, drivers will receive a minimum wage of $26 per hour for rides, which will be adjusted annually for inflation. In New York City, where drivers already receive minimum pay and some paid time off, Uber and Lyft drivers will now be entitled to $17 per hour for sick leave, with inflation adjustments.
The financial impact of this settlement is significant for both Uber and Lyft. Uber’s share of the settlement amounts to over 3% of its $9.23 billion in revenue generated in the last quarter, while Lyft’s share represents nearly 4% of its reported revenue of $1.02 billion.
In addition to the financial settlement, Uber and Lyft will be required to provide drivers with detailed compensation breakdowns. They must also inform drivers about the fares paid by passengers for each ride and offer an in-app chat tool to facilitate discussions about earnings and working conditions. Furthermore, the companies will allow drivers to appeal deactivation from their platforms, enhancing driver protections and promoting a more transparent working environment.
This landmark settlement not only addresses the issue of underpayment and denial of benefits for drivers but also sets important precedents for the ride-sharing industry as a whole. Uber and Lyft’s commitment to ongoing changes in how they pay drivers and offer benefits in New York State signifies a positive step towards improved conditions for drivers.
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