Uber and Lyft Agree to Pay $328 Million for Underpaying Drivers

Ride share services, Uber and Lyft agreed to pay a combined $328 million for withholding money from drivers. New York Attorney General Letitia James’ office secured this settlement, which would be the largest wage-theft settlement they have ever secured. Uber agreed to pay $290 million, and Lyft $38 million. The money will be distributed to eligible drivers who will be receiving back pay, mandatory sick leave, and other benefits.

The agreement achieved positive developments for drivers in the state of New York. Lyft had previously established the Black Car Fund which includes benefits and protections for drivers. Jeremy Bird, Lyft’s Chief Policy Officer, expressed his desire to provide New York drivers with the independence and full range of benefits that are available to drivers in California and Washington. On the other hand, the agreement has brought Uber closer to its “intention” of granting drivers flexibility without surrendering protections. The company has been working towards their goal of allowing drivers to decide when, where and how often they’d like to work without losing important benefits.

Uber has a long history of deducting sales taxes and Black Car Fund fees from drivers’ payments when these taxes and fees should have been paid by passengers. In their terms of service, Uber stated that they would only deduct commission from the drivers’ fare. Drivers were also free to charge passengers for any tolls, taxes or fees incurred, yet no method to do this was made available on the app. Lyft had implemented a similar practice from 2015 until 2017. The company would deduct an 11.4% administrative charge from drivers’ payments. This amount was equal to the amount of sales tax and Black Car Fund fees that should have been paid by customers.

Throughout the years, both rideshare companies have swindled their drivers out of millions of dollars in pay and benefits. Under New York City and New York State law, Uber and Lyft have failed to provide employees with sick leave. An overwhelming number of drivers come from immigrant communities and rely on these jobs to provide for their families while working long hours in challenging conditions. The wage-theft settlement serves as a guarantee that drivers will receive what has been rightfully earned and what is owed under the law. Rideshare drivers will earn one hour of sick pay for ever 30 hours worked, up to a maximum of 56 hours per year.

In addition to the settlement amount, Uber and Lyft are going to implement an “earnings floor”. This guarantees that drivers across New York State will be paid a minimum rate. Drivers across the country, excluding New York State, will receive a minimum of $26 per hour.

Uber and Lyft have also agreed to provide compensation breakdowns, including how much a customer paid for each ride. Additionally, drivers will be given an in-app chat option to discuss earnings and work conditions, and an option to appeal deactivation from their respective platforms.