Uber and Lyft to pay $328 million in New York wage theft settlement

Ride-hailing companies Uber and Lyft will pay a combined $328 million to settle wage theft claims in New York, Attorney General Letitia James announced on Thursday.

James said the settlements resolve investigations into the companies improperly charging drivers sales taxes and other fees when the costs should have been paid by customers.

Uber will pay $290 million and Lyft will pay $38 million. The money will be distributed to current and former drivers, she said. The companies have also agreed to provide drivers outside of New York City with paid sick leave and give drivers outside of New York City a minimum wage of $26 per hour.

Rideshare drivers work at all hours of the day and night to take people wherever they need to go, James said in a statement. For years, Uber and Lyft systemically cheated their drivers out of hundreds of millions of dollars in pay and benefits while they worked long hours in challenging conditions.

Tony West, chief legal officer for Uber, said the agreement 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.

Lyft's chief policy officer, Jeremy Bird, said in a statement, This is a win for drivers, and one we are proud to have achieved with the New York Attorney General's Office.

Uber and Lyft have become ubiquitous in New York in the last several years, with the easy to use ride-hailing apps largely supplanting the city's iconic yellow taxi cabs. The companies have been slow to adjust to regulations that govern taxi services in cities such as New York and have balked at providing drivers basic labour protections and benefits.

New York was the first city in the country to establish a minimum wage for the app-based drivers, who have effectively been classified as independent contractors in a so-called gig economy. The city has also implemented a minimum wage for app-based food delivery services such as Uber Eats.

We've waited eight long years to see justice for our members, a workforce that was cheated out of better living conditions, and timely meals and rest and leisure because the earnings that would have provided for that life were stolen by multi-billion dollar corporations, New York Taxi Workers Alliance Executive Director Bhairavi Desai said in a statement.

James said the New York Taxi Workers Alliance brought the wage theft complaints to her office.

In California, a court in March ruled that ride-hailing and delivery companies like Uber and Lyft can continue to treat their California drivers as independent contractors, meaning they are not entitled to benefits like paid sick leave and unemployment insurance.