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Rideshare companies Uber and Lyft will pay a combined $328 million to settle wage theft claims in New York, state Attorney General Letitia James announced on Nov. 2.
Uber will pay $290 million, and Lyft will pay $38 million into two separate settlement funds that will be distributed to current and former drivers.
The settlements will institute a minimum earnings floor, paid sick leave, proper hiring and earnings notices, and other improvements in drivers’ working conditions, James said.
From 2014 to 2017, Uber deducted sales taxes and Black Car Fund fees from drivers’ payments when those taxes and fees should have been paid by passengers, James said. The Black Car Fund is a nonprofit organization created by New York State to protect for-hire drivers and passengers. It provides safety and health programs and workers’ compensation insurance to black car and limousine drivers.
Uber misrepresented the deductions made to drivers’ pay in their terms of service, telling drivers that Uber would only deduct its commission from the drivers’ fares, and that drivers were entitled to charge the passenger for any tolls, taxes or fees incurred, although no method to do so was provided via the Uber Driver app, James said.
Lyft employed a similar method to shortchange drivers from 2015 to 2017, deducting a 11.4 percent 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. Uber and Lyft also failed to provide drivers with paid sick leave guaranteed to workers under New York City and New York state law, James said.
With the settlements, drivers will earn one hour of sick pay for every 30 hours worked, up to a maximum of 56 hours per year, James said.
“We are thrilled that our members won this historic victory to recover their stolen income,” said Bhairavi Desai, executive director of the New York Taxi Workers Alliance, a Long Island City, N.Y.-based union for drivers.
“The agreement is a win for drivers across New York State who can now enjoy both the flexibility that is so important to them, while also having new benefits and protections like a minimum earnings standard and paid sick leave,” Tony West, Uber’s chief legal officer, said in a press release. “This helps put to rest the classification issue in New York and moves us forward with a model that reflects the way people are increasingly choosing to work.”
In a statement, Lyft said, “The agreement prioritizes the benefits drivers want without sacrificing the independence and flexibility they need.”
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Minimum Wage
New York City was the first city in the country to establish a minimum wage for app-based drivers, who have been classified as independent contractors. The city also implemented a minimum wage for app-based food delivery services, such as Uber Eats.
Uber and Lyft drivers in New York City receive a $17.96 per hour minimum wage under regulations established by the city’s Taxi & Limousine Commission in 2019. Under the new settlements, Uber and Lyft drivers outside of New York City will receive a minimum of $26 per hour, adjusted annually for inflation, James said.
Drivers Continue to Be Classified as Independent Contractors
More than 100,000 current and former drivers in the state are eligible to benefit from the settlements.
The settlement ends James’ probe into Uber’s and Lyft’s classification of drivers as independent contractors instead of employees, a practice both companies regularly defend in lawsuits, when dealing with legislators, and at the ballot box.
Uber and Lyft, both based in San Francisco, denied wrongdoing. The settlements equal a little under 1 percent of Uber’s and Lyft’s annual revenue.
In a separate settlement, Uber recently agreed with the New York State Department of Labor to begin making quarterly payments to a state insurance fund to ensure that unemployed drivers receive benefits.
(Reuters)
California Drivers Remain Independent Contractors
Ride-hailing and delivery companies can continue to treat their California drivers as independent contractors, a state appeals court ruled on March 13. The court mostly upheld the state’s Proposition 22, which said ride-hailing businesses could legally classify their drivers as independent contractors, rather than employees. In general, independent contractors aren’t entitled to the benefit plans and legal protections that employees receive.
Settlement in California
In 2022, Uber agreed to pay $8.4 million to settle a class-action lawsuit with California drivers who claimed they were misclassified as independent contractors, rather than employees.
The settlement applies to drivers who used the Uber Rides App in California between Feb. 28, 2019, and Dec. 16, 2020, or who used the Uber Eats App in California between June 28, 2016, and Oct. 7, 2021, and who opted out of Uber’s arbitration agreement. It does not reclassify drivers as employees.
Uber, headquartered in San Francisco, has about 1 million U.S. drivers and about 29,000 employees worldwide.
