In a landmark settlement, ride-hailing giants Uber and Lyft have agreed to pay a combined $328 million to resolve allegations that they systematically underpaid their New York drivers. The settlement, announced by New York Attorney General Letitia James, marks the culmination of a multi-year investigation into the companies’ practices.
The attorney general’s office accused Uber and Lyft of misclassifying their drivers as independent contractors, a move that allowed the companies to avoid paying minimum wage, overtime, and sick leave. The investigation also found that the companies improperly charged drivers for certain fees and taxes that should have been paid by passengers.
Under the terms of the settlement, Uber will pay $290 million, while Lyft will contribute $38 million. The money will be distributed to current and former drivers who were affected by the companies’ alleged practices.
In addition to the financial payout, Uber and Lyft have also agreed to make significant changes to their business practices in New York. These changes include:
- Guaranteeing drivers a minimum hourly rate, including tips
- Providing paid sick leave to drivers
- Reimbursing drivers for certain expenses, such as fuel and vehicle maintenance
The settlement is a significant victory for New York drivers, who have long argued that they are being exploited by the ride-hailing companies. It is also a sign that the tide may be turning against gig economy companies, which have faced increasing scrutiny from regulators and lawmakers.
“This is a major victory for tens of thousands of Uber and Lyft drivers who have been denied their hard-earned wages,” said Attorney General James. “These companies have failed to classify their drivers as employees, depriving them of basic worker protections. Today’s settlement will not only put money back in the pockets of these workers, but it will also help ensure that they are treated fairly in the future.”
