Uber and Lyft to Pay $328 Million in Landmark Wage-Theft Settlement

In a landmark move, ride-sharing behemoths Uber and Lyft have reached a groundbreaking wage-theft settlement, agreeing to shell out a combined $328 million for withholding pay from their drivers. This monumental pact, heralded as the largest of its kind by New York Attorney General Letitia James, marks a decisive step towards ensuring fair compensation and enhanced benefits for ride-share drivers.

The Pact in Detail

Uber’s Contribution – $290 Million

Acknowledging past payment disparities, Uber has committed to paying $290 million as part of this settlement. The New York Attorney General’s office uncovered that from 2014 to 2017, Uber had deducted sales taxes and Black Car Fund fees from drivers’ payments, which should have been borne by passengers. Moreover, Uber misrepresented these deductions in its terms of service, leading drivers to believe that only the company’s commission would be deducted from their fare, and that they were entitled to charge passengers for any tolls, taxes, or fees incurred. However, no mechanism was ever provided through the Uber Driver app to facilitate this.

Lyft’s Contribution – $38 Million

Lyft, Uber’s counterpart in this settlement, has agreed to pay $38 million. Similar to Uber, Lyft had employed a comparable approach to shortchange drivers from 2015 to 2017. They deducted an 11.4% “administrative charge” from drivers’ payments in New York, equal to the amount of sales tax and Black Car Fund fees that should have been paid by passengers.

Redress and Benefits for Drivers

The crux of this settlement lies in providing restitution and benefits to the affected drivers. The combined $328 million will be disbursed to the drivers, ensuring they receive back pay. In addition to back pay, eligible drivers will also benefit from mandatory paid sick leave and other essential perks.

Paid Sick Leave

As part of this settlement, Uber and Lyft have agreed to provide their drivers with guaranteed paid sick leave. This marks a significant shift, granting drivers the kind of protection and compensation usually available to employees under New York City and New York State law. Drivers will earn one hour of sick pay for every 30 hours worked, up to a maximum of 56 hours per year.

Earnings Floor

Another crucial element of this settlement is the introduction of an “earnings floor.” This provision guarantees that drivers across the state are paid a minimum rate for their services. Outside of New York City, drivers will receive a minimum of $26 per hour. Drivers within New York City have already been benefiting from minimum driver pay, thanks to regulations established by the Taxi & Limousine Commission in 2019.

The Significance of the Pact

This landmark agreement has far-reaching ramifications for the ride-sharing industry. It signifies a major victory for drivers who have long been advocating for fair compensation and improved working conditions. The settlement is described as “historic” and “first-of-its-kind” by Uber, bringing the company closer to its goal of offering drivers greater flexibility in their work without sacrificing essential protections.

Jeremy Bird, Lyft’s chief policy officer, emphasizes the significance of this agreement as a win for drivers. It builds upon the existing benefits and protections enjoyed by drivers through the state’s Black Car Fund. The ultimate aim is to provide New York drivers with the independence and comprehensive benefits available to their counterparts in states like California and Washington.

Conclusion

The wage-theft settlement between Uber and Lyft, amounting to $328 million, is a pivotal development in the ride-sharing industry. It rectifies past wage discrepancies and ensures that drivers are not only fairly compensated but also provided with essential benefits, including paid sick leave. This groundbreaking agreement reflects a growing awareness of the rights and needs of ride-sharing drivers and marks a significant step towards achieving a more equitable working environment for them.

In essence, this landmark settlement represents a triumph for ride-sharing drivers and sets a precedent for fair compensation and improved working conditions in the industry. It underscores the commitment of Uber and Lyft to address past discrepancies and provide drivers with the independence and benefits they rightfully deserve.