Uber and Lyft Agree to $328 Million Settlement to Resolve Wage-Theft Complaints in New York
Uber and Lyft have reached a settlement to pay a total of $328 million to drivers in New York to address wage-theft complaints. This agreement stems from an investigation led by state attorney general Letitia James, which examined whether the companies collected specific fees and taxes from drivers instead of passengers and assessed whether drivers were denied paid sick leave.
The settlement is considered a victory for drivers, not only because it offers restitution for allegedly unpaid wages but also because it establishes a statewide right to minimum wage and grants paid sick leave benefits.
Andrew Wolf, an assistant professor at Cornell University's School of Industrial & Labor Relations, remarked that this settlement essentially recognizes these drivers as employees entitled to the same employment rights as other workers. Wolf also pointed out how gig companies have historically shifted most of the employment-related risks onto drivers.
State attorney general Letitia James stated, "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."
This settlement will see Uber contributing $290 million, while Lyft will pay $38 million into two funds that will disburse claims to around 100,000 current and former drivers in New York State who qualify for compensation.
Neither company has admitted to wrongdoing. Lyft's chief policy officer, Jeremy Bird, hailed the settlement as "a win for drivers" and expressed pride in achieving it in collaboration with the New York Attorney General's Office. He also noted the desire to continue working to provide New York drivers with the independence and full range of benefits seen in other states, such as California and Washington.
Uber offered a similar response, commending Letitia James' efforts and suggesting that the settlement clarifies the classification issue in New York, moving forward with a model that reflects how more people are choosing to work.
Shortly after the attorney general's announcement, Governor Kathy Hochul revealed that Uber would commence regular payments to New York's unemployment insurance program as part of a separate agreement with the state's labor department.
New York has become a significant battleground for securing labor rights for gig workers, and these settlements grant ride-hail drivers more of the benefits associated with traditional employees. However, labor activists argue that there is still more work to be done. It's important to note that neither settlement changes the status of gig workers in New York State or New York City; drivers are still classified as independent contractors.