Uber and Lyft to Pay $328 Million Settlement for Withholding Driver Pay

Uber and Lyft will pay a combined settlement of $328 million after multi-year investigations into their practices by the New York State Attorney General.

The investigations found that the companies withheld pay from drivers, deducting sales taxes and fees that should have been paid by riders, the Attorney General said in a Thursday (Nov. 2) press release. Uber and Lyft also prevented drivers from receiving benefits like sick leave that are available under the state’s labor laws, per the release.

“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,” New York State Attorney General Letitia James said in the release. “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.”

Uber said in a Thursday blog post that the settlement will provide platform workers with both flexibility and benefits. It will put to rest the classification issue in New York and serve as a model for other states, Uber Chief Legal Officer Tony West said in the post.

“We thank Attorney General James and her team for their hard work in delivering a resolution that balances accountability and innovation while addressing the true needs of these hard working drivers in New York,” West said.

Lyft said in a Thursday blog post that the agreement grants drivers new benefits while allowing them to keep their flexibility and independence.

“New York has long been a leader in providing drivers portable benefits through flexible earning opportunities with its Black Car Fund, and this agreement expands upon that foundation,” Lyft Chief Policy Officer Jeremy Bird said in the post. “We look forward to continuing this work in order to provide New York drivers the independence and full range of benefits available to those in other states, like California and Washington.”

The settlements require Uber to pay $290 million and Lyft to pay $38 million into separate settlement funds, which will be distributed to current and former drivers affected by the companies’ practices, according to the attorney general’s press release.

In addition to the financial compensation, the settlements will establish an “earnings floor,” guaranteeing that drivers across the state are paid a minimum rate from the time they receive a dispatch until the completion of the ride, the release said.

Furthermore, drivers will now have access to guaranteed paid sick leave, per the release. Uber and Lyft will also make updates to their apps to allow drivers to request sick leave directly through the apps.

In addition, under the settlement, Uber and Lyft will provide drivers with proper hiring notices and earnings statements; notify them of the amount paid by the rider after each trip; provide them with access to in-app chat support in multiple languages to address any questions or concerns about their earnings or working conditions; and enable drivers to appeal all deactivations from the platforms, according to the release.