Uber, Lyft agree to back pay $328M to New York drivers following probe

Ride-hailing companies Uber and Lyft have agreed to pay back $328 million to more than 100,000 New York drivers following a multi-year investigation, officials announced Thursday.

New York Attorney General Letitia James (D) confirmed two “landmark” settlements Thursday: Uber will pay $290 million and Lyft will pay $38 million for “stealing earnings from drivers.” James said the two settlements mark the largest wage settlement ever to be won by her office.

She explained the probe found that between 2014 and 2017 Uber deducted sales taxes and Black Car Fund fees from drivers’ payments instead of charging the passengers. The ride-share company “misrepresented the deductions” in the company’s terms of service and said the company would only deduct its commission from the drivers’ fare, James said.

Uber also told drivers they were “entitled to charge [the passenger] for any tolls, taxes or fees incurred.” The Uber Driver app, however, did not have a method for them to do so, the attorney general added.

Lyft also shortchanged drivers from 2015 to 2017, slashing a 11.4 percent “administrative charge” from drivers’ payment that equaled the sales tax and Black Car Fund fees that were supposed to be paid by riders, according to the probe.

“Rideshare drivers work at all hours of the day and night to take people wherever they need to go,” James wrote in a written statement. “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.”

Noting the drivers “overwhelmingly” are part of immigrant communities and depend upon these jobs to provide for families, she said the settlements will ensure the drivers “get what they have rightfully earned and are owed under the law.”

More than 100,000 drivers are estimated to receive settlement funds and benefits, the attorney general’s office said.

Uber and Lyft also agreed to an “earnings floor” as part of the agreement, ensuring drivers across the state “are paid a minimum rate from dispatch to completion of the ride.”

This means drivers outside of New York City will receive a minimum of $26 per hour, which will be adjusted yearly for inflation. Those in New York City already receive minimum driver pay under the city’s Taxi and Limousine Commission (TLC) regulations.

Prior to the settlement, James said the ride-share companies also did not allot paid sick leave available under New York City and New York state law.

Now, drivers will have guaranteed paid sick leave, earning one hour of sick pay for every 30 hours worked, with a maximum of 56 hours per year, James said. The sick leave pay will match the $26 minimum hourly rate set for drivers outside of New York City while those in New York City will receive $17 per hour as TLC regulations already include an amount for paid time off.

Uber and Lyft will also update their apps so drivers can request sick leave through the app and give drivers proper hiring notices and earnings statements, the attorney general’s office said.

Jeremy Bird, Lyft’s chief policy officer, called the settlement a “win for drivers.

“The agreement prioritizes the benefits drivers want without sacrificing the independence and flexibility they need,” a statement from Lyft wrote.

A spokesperson for Uber said the company denies all wrongdoing, while calling the lawsuit “a landmark, first-of-its-kind agreement,” that allows workers flexibility along with benefits and protections.

In its public statement, Uber said the settlement “put to rest” the issue of employment classification in New York, adding the agreement will serve as a model for other states.

“AG James is the first AG [attorney general] to do this and in doing so, delivery benefits and protections right away without getting bogged down in classification – in the past we’ve done this via the legislature and ballot initiatives,” the spokesperson told The Hill.

Drivers will also be able to see the amount paid by each rider, while also having access to in-app chat support to inquiry about earnings.

Updated at 3:40 pm.