Ride-sharing giants Uber and Lyft have agreed to pay a total of $328 million to settle accusations made by New York’s attorney general.
The settlement is related to the systematic underpayment and benefit denial of drivers. Uber will pay $290 million, while Lyft will pay $38 million, resolving the multi-year investigation conducted by Attorney General Letitia James.
As part of the agreement, drivers will be entitled to minimum hourly rates, paid sick leave, and have access to notices and in-app chat support for inquiries regarding their earnings and working conditions.
This settlement is expected to benefit over 100,000 current and former drivers in New York, making it the largest wage theft settlement in the attorney general’s office’s history.
The settlement money will be distributed to affected drivers, providing them with back pay and mandatory paid sick leave, among other benefits. Eligible drivers can file claims to receive the money they are owed.
Between 2014 and 2017, Uber was found to have wrongly deducted sales taxes and Black Car Fund fees from drivers’ earnings, which should have been paid by passengers.
The attorney general’s office reported that Uber misrepresented these deductions in their terms of service, stating that Uber would only deduct its commission from the fare, while drivers were “entitled to charge [the passenger] for any tolls, taxes or fees incurred,” even though no method for this was provided via the Uber Driver app.
Lyft employed a similar practice between 2015 and 2017, deducting an 11.4% “administrative charge” from drivers’ payments in New York, equivalent to the amount of sales tax and Black Car Fund fees that should have been paid by riders.
Additionally, both Uber and Lyft failed to provide drivers with the paid sick leave that employees are entitled to under New York City and New York State law.
New York Attorney General Letitia James expressed, “For years, Uber and Lyft systemically cheated their drivers out of hundreds of millions of dollars in pay and benefits while they worked long hours in challenging conditions.
These drivers overwhelmingly come from immigrant communities and rely on these jobs to provide for their families. This settlement will ensure they finally get what they have rightfully earned and are owed under the law.”
As part of the settlement, both Uber and Lyft will collectively pay $328 million in back pay to former drivers. The agreement also establishes an “earnings floor” to ensure that drivers throughout the state receive a minimum wage.
Drivers outside of New York City will be guaranteed a minimum of $26 per hour, while those in New York City already receive minimum driver pay in accordance with the Taxi & Limousine Commission’s 2019 regulations.
Furthermore, Uber and Lyft drivers will now have guaranteed access to paid sick leave. They will accrue one hour of sick pay for every 30 hours worked, up to a maximum of 56 hours per year.
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