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Uber and Lyft agree to $328 million New York state settlement

November 06, 2023

Uber will pay $290 million and Lyft will pay $38 million as part of settlements in New York state for a total of $328 million, New York Attorney General Letitia James announced on Nov. 2. The deal also guarantees drivers will receive sick pay and sets a minimum pay rate.

In a blog post, Lyft said the agreement resolves an investigation related to the classification of drivers who use its platform as independent contractors as well as certain fees Lyft charged between 2015 and 2017.

“This is a win for drivers and one we are proud to have achieved with the New York Attorney General’s Office,” 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.”

Uber Chief Legal Officer Tony West also remarked in a post, citing the classification issue.

“This helps put to rest the classification issue in New York and moves us forward with a model that reflects the way people are increasingly choosing to work,” West said. “It also will serve as a model for other states, demonstrating that when we work together with legislators and regulators, we can resolve these issues in a way that benefits workers and consumers alike.”

As part of the settlements, Uber and Lyft agreed to an earnings floor, guaranteeing that drivers in New York are paid a minimum rate from dispatch to completion of the ride, according to the office. Drivers outside of New York City will receive a minimum of $26 per hour, adjusted annually for inflation. Drivers in New York City already receive minimum pay.

It also resolved an issue of fees.

“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,” James said. “These drivers overwhelmingly come from immigrant communities and rely on these jobs to provide for their families. These settlements will ensure they finally get what they have rightfully earned and are owed under the law.”

In its announcement, the New York Attorney General’s office said Uber deducted sales taxes and black-car fund fees from drivers’ payments when those taxes and fees should have been paid by passengers. Uber misrepresented the deductions made to drivers’ pay, telling them it would only deduct its commission from the drivers’ fares, according to the office. The company also told drivers they were entitled to charge passengers for any tolls, taxes or fees incurred, though there was no method to do so.

This activity allegedly occurred from 2014 to 2017.

Lyft used similar methods between 2015 and 2017, according to the office. Lyft deducted an 11.4% administrative charge from drivers’ payments in New York, which was equal to the amount of sales tax and black-car fund fees that should have been paid by rider.

The office said Uber and Lyft also failed to provide drivers with paid sick leave under New York City and state laws.

The deal affects more than 100,000 drivers, according to the office.