Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) are set to pay a combined $328 million in a landmark wage theft settlement following a multi-year investigation by New York Attorney General Letitia James. The investigation, which uncovered systematic underpayment of drivers and denial of benefits, has resulted in the largest wage theft settlement in the history of the Attorney General's office. Uber will contribute approximately $290 million and Lyft about $38 million to the settlement fund.
The probe revealed that between 2014 and 2017, both companies had improperly deducted sales taxes and Black Car Fund fees intended for workers' compensation and insurance coverage from drivers' earnings. This practice was seen as misrepresentation in their terms of service. Lyft was found guilty of similar practices between 2015 and 2017. Both companies were also accused of denying drivers, primarily immigrants serving as primary breadwinners, their legal sick leave entitlements.
The settlement will benefit over 100,000 current and former drivers who can file a claim to receive these funds. As part of the agreement reached, Uber and Lyft are mandated to improve working conditions by setting a minimum driver earnings floor and providing guaranteed paid sick leave as per current regulations.
In addition to the financial settlement, both companies have agreed to make significant changes to their business practices. These include guaranteeing minimum hourly rates, paid sick leave, and in-app support for driver queries. For drivers outside New York City, a minimum $26 per hour pay is now guaranteed as per the city's Taxi and Limousine Commission's mandate. In New York City, drivers will receive $17 per hour for sick leave.
The allegations against Uber and Lyft were initially brought forward by the New York Taxi Workers Alliance.
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