Uber and Lyft have agreed to pay a total of $328 million to settle claims made by New York’s attorney general that the ride-sharing companies systematically cheated drivers out of pay and benefits. Attorney General Letitia James announced that Uber will pay $290 million and Lyft will pay $38 million to resolve the investigation, which she called the largest wage theft settlement in her office’s history. As part of the settlement, drivers will be guaranteed minimum hourly rates, paid sick leave, and access to notices and in-app chat support for addressing questions about earnings and working conditions.
The investigation by James’ office focused on allegations that Uber and Lyft improperly collected taxes and fees from drivers instead of passengers. It also examined the companies’ practice of classifying drivers as independent contractors rather than employees. Over 100,000 current and former drivers in New York are eligible to benefit from the settlements.
Shannon Liss-Riordan, a lawyer representing thousands of Uber and Lyft drivers, described the settlement as “huge” and believes it could help other states in their efforts to protect drivers’ rights. Both Uber and Lyft, based in San Francisco, denied any wrongdoing and characterized the settlements as a “win” for drivers. Following the announcement, shares of both companies saw an increase, with Uber gaining over 6% and Lyft gaining over 9%.
Uber’s chief legal officer, Tony West, stated that the settlement helps resolve the issue of driver classification and can serve as a model for other states. Lyft, in a separate statement, maintained that it has always properly classified drivers as independent contractors.
The article also highlights the long-standing defense by Uber and Lyft against claims that they shortchange drivers by refusing to classify them as employees. Both companies argue that many drivers prefer the flexibility of working as independent contractors. The payments made in the settlements amount to less than 1% of Uber’s and Lyft’s annual revenue.
The investigation revealed that Uber and Lyft allegedly deducted sales taxes and fees from drivers’ payments that should have been paid by passengers. The violations by Uber occurred from November 2014 to May 2017, while Lyft’s violations took place from October 2015 to July 2017. Additionally, both companies were accused of denying drivers sick leave, which is legally required for state and New York City employees.
Attorney General James stated that the settlements ensure drivers “finally get what they have rightfully earned and are owed under the law.” In a separate development, Uber reached an agreement with the New York State Department of Labor to make quarterly payments to a state insurance fund, ensuring that unemployed drivers receive benefits. The specific amount of Uber’s payments was not disclosed.
The investigation was initiated based on concerns raised by the New York Taxi Workers Alliance, which represents various types of drivers. Under the settlements, drivers outside of New York City will receive a minimum of $26 per hour for rides and sick leave, adjusted annually for inflation. Drivers in New York City already receive minimum pay and some paid time off as required by the city’s Taxi and Limousine Commission. Uber and Lyft drivers in the city will now receive $17 per hour for sick leave, with inflation adjustments.
In conclusion, the settlements reached by Uber and Lyft with the New York attorney general’s office aim to address claims of wage theft and improper treatment of drivers. The agreements provide drivers with guaranteed minimum rates, paid sick leave, and improved support for addressing work-related concerns. The settlements also shed light on the ongoing debate surrounding the classification of drivers as independent contractors versus employees.
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