Ride-hailing companies Uber and Lyft have reached a settlement of $328 million to resolve wage-theft allegations in New York. This agreement comes as a result of an investigation led by New York State Attorney General Letitia James, which looked into whether the companies were improperly withholding fees and taxes from drivers.
Key Takeaway
The $328 million settlement between Uber, Lyft, and the New York State Attorney General grants ride-hail drivers in New York more of the benefits typically associated with traditional employees. While it does not change the gig worker status in the state, the settlement ensures drivers receive a minimum wage, paid sick leave, and addresses past wage-theft allegations.
Investigation into Wage Theft and Lack of Paid Sick Leave
The investigation conducted by the State Attorney General’s office focused on two main issues: wage theft and the lack of paid sick leave for drivers. It was found that both Uber and Lyft had been allegedly cheating drivers out of millions of dollars in pay and benefits while they worked long hours under challenging conditions.
The settlement not only provides drivers with backpay for the alleged stolen wages but also establishes a statewide right to a minimum wage and guarantees access to paid sick benefits.
Assistant Professor Andrew Wolf from Cornell University’s School of Industrial & Labor Relations commented on the significance of the settlement, stating that it indicates the companies’ recognition of drivers as employees deserving of employment rights. The settlement highlights how gig companies have historically shifted employment risks onto drivers.
Details of the Settlement
Uber will pay $290 million, while Lyft will pay $38 million into two funds. These funds will be used to compensate around 100,000 current and former drivers in New York who are eligible for filing claims.
Neither company has admitted any wrongdoing. However, Lyft’s Chief Policy Officer, Jeremy Bird, expressed satisfaction with the settlement, describing it as a win for drivers. He also expressed a desire to continue working towards providing New York drivers with the same independence and benefits available in other states.
Uber similarly praised the efforts of the State Attorney General and stated that the settlement helps resolve the classification issue in New York, moving forward with a model that reflects how people are increasingly choosing to work.
In a separate settlement with New York’s labor department, Uber has also committed to making regular payments to the state’s unemployment insurance program.
Implications and Future Benefits of the Settlement
As part of the settlement, drivers will now be entitled to one hour of sick pay for every 30 hours worked, up to a maximum of 56 hours per year. Uber and Lyft will also need to allow drivers to request sick leave through their respective apps.
Furthermore, drivers outside of New York City will earn at least $26 per hour, but only while they are en route to a rider or have a rider in the vehicle. This provision has been contentious among labor activists, who argue that time spent searching for gigs should also be compensated.
It is worth noting that drivers within New York City already receive a minimum driver pay under existing regulations established in 2019 by the Taxi and Limousine Commission.
Both Uber and Lyft have mentioned that the additional costs resulting from the settlement may be passed on to riders. However, Lyft has yet to provide further clarification on this matter.
Addressing Gig Worker Rights
These settlements reflect the ongoing battle for labor rights for gig workers in New York. While they grant ride-hail drivers more benefits typically given to employees, labor activists argue that more work needs to be done to fully address the challenges faced by gig workers.
Gig workers, including drivers for companies like Uber and Lyft, are classified as independent contractors, which means they are often ineligible for certain benefits such as minimum wage protection, healthcare, and workers’ compensation. Critics argue that this classification allows companies to minimize costs while relying on these workers to support their operations.
The settlement in New York sets a precedent by holding gig companies accountable for wage theft and providing drivers with additional protections. However, the debate around the classification of gig workers and their rights is far from settled.
Judge Upholds Minimum Pay for NYC Delivery Workers
In a related development, a judge recently upheld the requirement for food delivery companies in New York City to pay a minimum wage of $18 per hour to delivery workers. This ruling further emphasizes the ongoing efforts to secure fair compensation and rights for gig workers in the city.
