$328M Uber, Lyft Settlement Reached In Wage Theft Investigation

August 15, 2024

Highlights

Uber and Lyft have agreed to a $328 million settlement in New York State for wage theft claims by rideshare drivers, making it the largest backpay settlement won by the Office of the Attorney General.
Drivers who were cheated will receive the funds and be eligible for accommodations such as paid sick leave and minimum wage for hours worked.
The settlement addresses not only wage theft but also improper deductions from driver pay, including jurisdictional taxes, with Uber accused of deducting taxes and fees from drivers' payments and Lyft deducting administrative charges.

Uber and Lyft have agreed to a $328 million settlement in New York State, as part of an investigation into claims of wage theft by rideshare drivers in that jurisdiction.

On November 2nd, New York State Attorney General (AG) Letitia James issued a press release, entitled "Attorney General James Secures $328 Million from Uber and Lyft for Taking Earnings from Drivers."

A subheading for the press release broke down the settlement amount per company, and indicated the $328 million combined sum was the "largest backpay settlement [Office of the Attorney General, or OAG] has ever won."

It went on to say the funds would "go to drivers who were cheated as part of the settlement," and that the drivers would be eligible for accommodations such as paid sick leave, minimum wage for hours worked, and "other benefits."

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New York City-area news outlet WNBC covered the settlement, and included a statement by Uber's chief legal officer Tony West.

West said the settlement "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."

Jeremy Bird, chief policy officer for Lyft, was quoted as saying:

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

Attorney Shannon Liss-Riordan represents "thousands" of Uber and Lyft drivers according to Reuters. Regarding the New York State settlement, Liss-Riordan said:

This is huge ... This settlement could help advance other states' efforts to reach a recovery for drivers whose rights have been violated.

CNN Business addressed some of the practices at issue with respect to the settlement, further detailing why minimum rates of pay and sick leave were factored in to it.

Additional allegations outside of wage theft involved how Uber and Lyft handled jurisdictional taxes, which the AG's office claimed were improperly deducted from driver pay:

James’ office accused Uber of deducting sales tax and Black Car Fund fees from drivers’ payments from 2014 to 2017, when those taxes and fees should have been paid by passengers. (The Black Car Fund is a New York state-backed surcharge to cover workers’ compensation and insurance). The investigation also accuses Uber of misrepresenting deductions made to drivers’ pay in their terms of service.

James’ office, meanwhile, accuses Lyft of similarly deducting an “administrative charge” from drivers’ payments from 2015 to 2017 in New York that was equal to the amount of sales tax and Black Car Fund fees that should have been paid by riders.

Reporting by the New York Times also addressed taxes and rideshare companies, indicating the investigation was initiated partly for that reason:

The investigation began in 2020 after the New York Taxi Workers Alliance, a group representing the drivers, made a complaint. The attorney general’s office focused on a period from 2014 to 2017 during which Uber was accused of deducting sales taxes and fees from drivers’ payments when they should have been paid by passengers.

From 2015 to 2017, Lyft similarly deducted an 11.4 percent “administrative charge” from drivers’ payments in New York equal to the amount of sales tax and fees that should have been paid by riders, the attorney general’s office said.

According to the Times, Uber and Lyft drivers will accrue "one hour of sick pay for every 30 hours worked, up to 56 hours per year" under the terms of the settlement.

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Finally, the Office of the Attorney General (OAG)'s statement disclosed the terms of the settlement in terms of specifics.

It explained that "Uber will pay $290 million and Lyft will pay $38 million into two separate settlement funds which will be entirely distributed to current and former drivers."

The statement explained that rideshare drivers "outside of New York City will receive a minimum of $26 per hour, adjusted annually for inflation, ensuring for the first time that the thousands of Uber and Lyft drivers working primarily outside of New York City will be guaranteed minimum pay" under the settlement.

Attorney General Letitia James was quoted in the press release. She began:

Rideshare drivers work at all hours of the day and night to take people wherever they need to go. 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. These drivers overwhelmingly come from immigrant communities and rely on these jobs to provide for their families.

James continued, pledging to ensure all "gig economy" workers were protected under state labor laws and warning similar companies:

These settlements will ensure they finally get what they have rightfully earned and are owed under the law. My office will continue to make sure that companies operating in the so-called ‘gig economy’ do not deprive workers of their rights or undermine the laws meant to protect them.

Under the terms of a settlement announced on November 2nd, Uber and Lyft would pay a combined $328 million to current and former drivers in New York State. Per the OAG, eligible drivers could access the funds owed to them by filing a claim with James' office.

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