In a significant development, New York Attorney General Letitia James has announced a substantial settlement agreement with rideshare giants Uber and Lyft, amounting to a total of $328 million. The settlement is the result of extensive investigations into the companies’ alleged practices of “taking earnings” from their drivers, which deprived them of substantial pay and benefits. This landmark settlement is expected to have far-reaching implications for rideshare drivers in New York and possibly beyond.

The Allegations and Investigations

The state attorney general’s office initiated multi-year investigations into Uber and Lyft, which uncovered troubling findings regarding their treatment of drivers. The investigations revealed that both companies had policies in place that withheld certain pay from drivers and prevented them from enjoying the benefits entitled to them under New York labor laws.

One of the major allegations against Uber is that it deducted sales tax and Black Car Fund fees from drivers’ payments between 2014 and 2017, even though these taxes and fees should have been paid by passengers. The Black Car Fund is a New York state-backed surcharge designed to cover workers’ compensation and insurance. Additionally, the investigation accuses Uber of misrepresenting the deductions made to drivers’ pay in their terms of service.

Lyft, on the other hand, is accused of similarly deducting an “administrative charge” from drivers’ payments between 2015 and 2017 in New York, which equaled the amount of sales tax and Black Car Fund fees that should have been borne by riders.

The Settlement Terms

As part of the settlement agreement, Uber will be required to pay approximately $290 million, while Lyft will contribute approximately $38 million. These funds will be allocated to two separate funds, which will subsequently be distributed as back pay to both current and former drivers who were affected by the companies’ practices.

The settlement doesn’t stop at financial compensation. It also mandates that Uber and Lyft implement improvements in drivers’ working conditions. Among these improvements is the introduction of a minimum driver “earnings floor,” which aims to provide drivers with a more stable income. While drivers operating in New York City already receive minimum driver pay under current regulations, this new measure will extend the minimum rate to rideshare drivers outside of New York City. Additionally, rideshare drivers will now be entitled to guaranteed paid sick leave.

Impact on Drivers

The implications of this settlement are significant. More than 100,000 drivers in New York stand to benefit from the settlement funds and expanded benefits. According to surveys conducted by the attorney general’s office, nine out of ten drivers in New York City are immigrants. Two-thirds of them work full-time as drivers, and over half are the primary breadwinners in their households. This settlement is a potential game-changer for these drivers, offering them the compensation and rights they rightfully deserve.

Eligible drivers will have the opportunity to file claims to receive their share of the settlement funds. It’s worth noting that both Uber and Lyft vehemently deny any wrongdoing, but the settlement demonstrates their commitment to resolving the matter.

Reactions and Future Outlook

Tony West, Uber’s chief legal officer, praised the agreement with the New York Attorney General’s office, calling it a “win for drivers across New York State.” He emphasized how the settlement not only provides drivers with flexibility but also offers new benefits going forward. West highlighted Uber’s longstanding advocacy for changing the status quo to allow platform workers to have the freedom to work when, where, and how often they desire while receiving essential benefits.

Jeremy Bird, Lyft’s chief policy officer, echoed similar sentiments, emphasizing that this settlement is a significant win for drivers. He noted that New York has been a leader in providing drivers with portable benefits through flexible earning opportunities, and this agreement builds upon that foundation. Bird expressed the company’s commitment to continuing its work to provide New York drivers with the same level of independence and benefits enjoyed by their counterparts in states like California and Washington.

The $328 million settlement between New York Attorney General Letitia James and rideshare giants Uber and Lyft marks a pivotal moment for rideshare drivers, especially in New York. The allegations of “taking earnings” from drivers have been thoroughly investigated, leading to this substantial resolution. As eligible drivers prepare to claim their rightful compensation, the settlement also ushers in improvements in working conditions, setting a precedent for fair treatment in the gig economy. While Uber and Lyft maintain their innocence, this settlement underscores the importance of protecting the rights and earnings of the thousands of drivers who rely on these platforms.