Ride-sharing giants Uber and Lyft have agreed to pay a staggering combined sum of $328 million to rectify allegations of systematic underpayment of their drivers and the denial of mandatory paid sick leave in New York, Reuters reports.
This landmark agreement was announced by New York Attorney General Letitia James, who hailed it as the most substantial wage theft settlement in the history of her office.
Rideshare drivers demonstrate against rideshare companies Uber and Lyft during a car caravan protest on August 6, 2020 in Los Angeles. - The drivers, organized by the Mobile Workers Alliance and Rideshare Drivers United unions, say Uber and Lyft's are pushing a "deceptive" November ballot initiative, which, if passed, they claim would "rewrite labor law" and turn app-based drivers into independent contractors, exempting companies such as Lyft and Uber from standard wage and hour restrictions. (Photo by Robyn Beck / AFP)
Uber, Lyft's Sweeping Settlements
Under the terms of this sweeping settlement, Uber is set to pay a remarkable $290 million, with Lyft contributing $38 million to resolve the multi-year investigation carried out by the attorney general's office.
More than 100,000 current and former drivers in New York State are now poised to receive both settlement funds and essential benefits as part of the agreement.
Attorney General James stated, "This settlement will ensure they finally get what they have rightfully earned and are owed under the law."
The investigation, prompted by concerns raised by the New York Taxi Workers Alliance, highlighted that these ride-sharing giants often classified their drivers as independent contractors rather than employees, consequently shortchanging them on pay and essential benefits.
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Driver Pay, Benefits Scandal
The settlement addresses several key issues, including the alleged improper deduction of sales taxes and fees for a workers' compensation fund from drivers' payments, which passengers should have covered.
CNBC reports that Uber's infractions occurred between 2014 and 2017, while Lyft's misconduct extended from 2015 to 2017. Moreover, both companies were found to have denied drivers the paid sick leave mandated by the state and New York City for its employees.
Key provisions of the settlement include ensuring drivers outside New York City receive a minimum wage of $26 per hour for rides, with this rate to 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, along with inflation adjustments.
A Closer Look
Uber's share of the settlement accounts for over 3% of its staggering $9.23 billion in revenue generated in the last quarter, while Lyft's share represents nearly 4% of its $1.02 billion in reported revenue. These companies have also agreed to ongoing changes in how they pay drivers and offer benefits in New York State.
In addition to the monetary settlement, the ride-sharing giants will be required to provide drivers with compensation breakdowns.
Both Uber and Lyft will have to notify drivers about the fares paid by passengers for each ride, and offer drivers an in-app chat tool to facilitate discussions about earnings and working conditions.
The companies will also allow drivers to appeal deactivation from their platforms, enhancing driver protections and ensuring a more transparent working environment.
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