Uber and Lyft to Pay $328 Million in Wage Theft Settlement for New York Drivers

Uber and Lyft to Pay $328 Million in Wage Theft Settlement | Mr. Business Magazine

Ride-sharing giants Uber and Lyft have reached an agreement to settle a significant wage theft case in New York. The New York Attorney General’s office led the investigation, which revealed that both companies had systematically deprived their drivers of rightful wages and benefits. The settlements, totaling $328 million, will impact over 100,000 current and former drivers in New York. In addition to financial restitution, the ride-sharing platforms will now be required to institute minimum hourly pay rates and provide paid sick leave to their drivers.

Unfairly Deducting Sales Taxes from Drivers

Uber’s portion of the settlement amounts to $290 million, while Lyft will pay $38 million. The investigation found that both companies unfairly deducted sales taxes from drivers’ earnings that should have been paid by passengers between 2014 and 2017. Furthermore, they had failed to offer paid sick leave, which is a crucial benefit for workers in any industry, but particularly important for gig economy drivers. As part of the settlement, drivers operating outside New York City will be guaranteed a minimum hourly rate of $26 per hour, in addition to earning one hour of sick pay for every 30 hours worked. This sick pay benefit will be capped at 56 hours per year.

Benefits for Drivers

Drivers in New York City will receive a rate of $17 per hour for sick leave, while those operating outside the city will receive $26 per hour. These rates will be adjusted annually to account for inflation. Drivers can file a claim to receive their share of the settlement on the New York Attorney General’s website. Furthermore, Uber and Lyft will need to update their mobile apps to streamline the process of requesting sick leave and offer assistance for pay-related inquiries. Additionally, they will provide detailed earnings statements to drivers to enhance transparency regarding their compensation.

Uber has also reached a separate settlement with the Department of Labor after facing two lawsuits for failing to provide unemployment benefits to its drivers. As part of this agreement, Uber will make quarterly contributions to the New York State Unemployment Insurance Trust Fund to cover its drivers. The exact sum for retroactive payments dating back to 2013 has not been disclosed.

Uber and Lyft to pay $328M settlement to drivers for ‘stealing earnings’

NYTWA’s Active Involvement for the Benefits for Drivers

The New York Taxi Workers Alliance (NYTWA) has been actively involved in legal actions to secure unemployment benefits for drivers, as the classification of drivers as either employees or independent contractors remains a contentious issue. The settlement marks a victory for Uber drivers across the state, ensuring they have access to vital benefits promptly. It also relieves New York taxpayers from subsidizing large ride-sharing corporations. In a joint statement, the NYTWA and Legal Services NYC expressed their satisfaction with the settlement, highlighting that drivers for the state’s largest employer will now have smoother access to unemployment benefits.

In recent years, New York has intensified its scrutiny of app-based service providers as part of a broader effort to reclassify gig workers as employees. In contrast, a California court rejected a similar bill in March, allowing companies to continue classifying their drivers as contractors. Nevertheless, New York has achieved progress in bolstering worker protections. In September, companies like Uber, GrubHub, and DoorDash were mandated to pay their delivery workers a minimum wage, a move that has been positively received by many workers in the gig economy.

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