Uber and Lyft agree to pay $328m to New York drivers

Ride-sharing firms Uber and Lyft will pay $328m (£269m) to settle claims they “systematically cheated” New York drivers out of pay and benefits.

It resolves a long investigation by the New York attorney general, who called it the largest wage theft settlement in her office’s history.

The agreement also means that drivers in the state will receive guaranteed paid sick leave.

Uber called it a “landmark”, while Lyft said it was “a win for drivers”.

The settlement means that neither company has to admit fault, with Uber paying $290m as part of it, while Lyft will pay $38m. Both have denied any wrongdoing and praised the announcement.

It comes as part of a long-running debate over whether the ride-sharing apps in the “gig economy” should class drivers as employees or as self-employed workers.

“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,” New York attorney general Letitia James said in a statement.

Her office looked into claims that that Uber and Lyft improperly deducted taxes and fees from New York drivers, rather than their passengers, between 2014 and 2017.

It also alleged that the companies failed to provide drivers with paid sick leave, which employees are entitled to in New York law.

“These drivers overwhelmingly come from immigrant communities and rely on these jobs to provide for their families,” Ms James said.

“These settlements will ensure they finally get what they have rightfully earned and are owed under the law.”

According to Ms James, the money will go to “over 100,000 hardworking people”, and she encouraged those eligible to file a claim for funds they might be owed.

Uber also said it would pay a undisclosed amount into New York State’s unemployment insurance fund, so drivers and delivery workers have access to unemployment benefits, should they find themselves out of work.

Uber said the agreement on Thursday would serve as a “model for other states”, putting into place rules which mean New York City drivers receive up to 56 hours of paid sick leave per year.

Uber drivers outside of New York will be entitled to an hour of sick leave at full pay for every 30 hours worked and a minimum wage of at least $26 per hour.

The earnings standard which has been in place for several years will remain for drivers in New York City.

Both firms described the announcement as a “win for drivers”.

Lyft drivers outside of New York City will also earn a minimum of $26 per hour for “engaged time”, while all of its New York drivers will be eligible to accrue paid sick leave, it said in a statement.

In 2021, the UK Supreme Court ruled Uber drivers must be treated as workers rather than as self-employed contractors, who have fewer entitlements.

At the time, the ride-hailing giant called it “turning the page” on workers’ rights and promised drivers would earn at least the National Living Wage.

After today’s agreement in New York, Uber shares rose 5.2% in early trade, while Lyft jumped 7.1%.