Uber and Lyft to pay $328 million in New York wage theft settlement
Ride-hailing companies Uber and Lyft will pay a combined $328 million to settle wage theft claims in New York and have agreed to establish a minimum wage and paid sick leave for drivers across the state, Atty. Gen. Letitia James announced Thursday.
The settlements resolve investigations into the companies improperly charging drivers sales taxes and other fees when the costs should have been paid by customers.
Uber will pay $290 million and Lyft will pay $38 million. The money will be distributed to current and former drivers, James said. The companies have also agreed to give drivers outside New York City paid sick leave and a minimum wage of $26 per hour.
“For years, Uber and Lyft systemically cheated their drivers out of hundreds of millions of dollars in pay and benefits while they worked long hours in challenging conditions,” James said in a statement.
Tony West, chief legal officer for Uber, said the agreement “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.”
After Uber and other gig giants failed to pay a mandated rate hike, two eagle-eyed drivers started asking questions — and won a jackpot for California gig workers.
Lyft’s chief policy officer, Jeremy Bird, said in a statement: “This is a win for drivers, and one we are proud to have achieved with the New York attorney general’s office.”
Uber and Lyft have become ubiquitous in New York in the last several years, with the easy-to-use ride-hailing apps largely supplanting the city’s iconic yellow taxi cabs. The companies have been slow to adjust to regulations that govern taxi services in cities such as New York and have balked at providing drivers with basic labor protections and benefits.
New York was the first city in the country to establish a minimum wage for the app-based drivers, who have effectively been classified as independent contractors in a so-called gig economy. The city has also implemented a minimum wage for app-based food delivery services such as Uber Eats.
“We’ve waited eight long years to see justice for our members, a workforce that was cheated out of better living conditions, and timely meals and rest and leisure, because the earnings that would have provided for that life were stolen by multibillion-dollar corporations,” New York Taxi Workers Alliance Executive Director Bhairavi Desai said in a statement.
James said the New York Taxi Workers Alliance brought the wage theft complaints to her office.
An appellate court determined Proposition 22 should stand, disagreeing with a 2021 ruling finding that central provisions of the law conflicted with the state Constitition, rendering the law unenforceable, and tossing it out in its entirety.
In California, a court in March ruled that ride-hailing and delivery companies such as Uber and Lyft can continue to treat their California drivers as independent contractors, meaning they are not entitled to benefits such as paid sick leave and unemployment insurance.
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