Uber and Lyft agree to $328Mn settlement in landmark driver wage theft probe by New York AG

In a settlement that is groundbreaking in every sense of it, ride-hailing giants Uber and Lyft have agreed to a historic settlement with the New York attorney general’s office, totalling an astounding $328 million. This landmark agreement serves as the culmination of an extensive investigation into wage theft that exposed systematic exploitation of drivers.

Uber will be paying a total of $290 million as part of the settlement, while Lyft will pay the remaining $38 million, to provide the settlement funds to over 100,000 current and former drivers in New York. These financial obligations come alongside the concessions and changes that both Uber and Lyft will have to make, such as paid sick leave and minimum hourly pay rates. This also represents the largest wage settlement ever secured by the New York attorney general’s office.

Letitia James, New York attorney general, led a comprehensive investigation into the practices of Uber and Lyft, unearthing years of wage theft aimed at drivers. This investigation, which spanned multiple years, revealed a troubling pattern of wage exploitation targeting drivers and depriving them of their rightful earnings and benefits. The investigation has brought to light a disturbing practice by both Uber and Lyft, where they systematically deducted sales taxes and Black Car Fund fees from drivers’ earnings for several years. Equally concerning was the misrepresentation of these deductions in the companies’ terms of service.

“Rideshare drivers work at all hours of the day and night to take people wherever they need to go,” James said. “For years, Uber and Lyft systematically cheated their drivers out of hundreds of millions of dollars in pay and benefits while they worked long hours in challenging conditions. These drivers overwhelmingly come from immigrant communities and rely on these jobs to provide for their families. These settlements will ensure they finally get what they have rightfully earned and are owed under the law. My office will continue to make sure that companies operating in the so-called ‘gig economy’ do not deprive workers of their rights or undermine the laws meant to protect them.”

Now, to ensure that drivers receive fair compensation, those operating outside of New York City will be entitled to a minimum earnings floor of $26 per hour. This rate will be subject to annual adjustments to account for inflation. It’s important to note that New York City drivers already operate under minimum pay regulations established by the Taxi & Limousine Commission. And for the first time, drivers will have access to paid sick leave. They will earn one hour of sick pay for every 30 hours worked, with a maximum cap of 56 hours per year. The rate of compensation for paid sick leave will mirror the minimum hourly rate of $26 for drivers outside New York City, and $17 per hour for drivers within the city, aligning with existing regulations.

Uber and Lyft have also been tasked with overhauling their apps to streamline the process of requesting sick leave and enhance support for queries related to compensation. Furthermore, drivers are to receive detailed earnings statements, outlining their compensation on a per-ride basis. This feature will enable drivers to understand precisely how much each rider paid for their trip. They will also having access to in-app chat support to inquiry about earnings in a variety of languages. Last but not the least, drivers can also appeal all decisions by Uber to deactivate a Driver’s access to the app.