Uber and Lyft have agreed to settle years of legal disputes in Massachusetts, resulting in a significant pay rise and benefits for their drivers.
Big Win for Massachusetts Drivers
Rideshare drivers working for Uber and Lyft in Massachusetts will now earn a minimum of $32.50 per hour, thanks to a settlement between the two companies and the state government.
Ongoing for 4 Years
The settlement was announced by Massachusetts Attorney General Andrea Campbell, who first sued the two rideshare companies back in July 2020, asserting that their drivers should be classified as employees instead of independent contractors.
Violation of Labor Laws
For years both companies registered their drivers as contractors to avoid paying minimum rates and various benefits that would be required for employees. They were accused of violating various labor laws around wages and working hours.
$175 Million Package
Now, Uber and Lyft have agreed to pay their Massachusetts workers some of the highest rates in the country for drivers. They will also pay a combined sum of $175 million to settle the lawsuit and bring an end to the above allegations.
Compensation and Backpay
$148 million will be paid by Uber and $27 million by Lyft. Approximately $140 million will be paid out in compensation and backpay to past and present drivers who were underpaid by the companies.
Drivers Notified Soon
Drivers who qualify for compensation and/or backpay will be contacted by the Attorney General’s office in the coming weeks, according to Campbell’s announcement.
A Range of Benefits
The settlement will also include several benefits and protections for drivers: accident insurance, paid sick leave, healthcare funding, and more.
End of a Ballot Initiative
Both companies will also cease support of a state ballot initiative that would allow Massachusetts residents to vote for rideshare drivers to legally remain as independent contractors under state employment laws.
InstaCart and Doordash Also Withdraw
While drivers for similar delivery companies like InstaCart and DoorDash will not win the same rights as Uber and Lyft drivers, both companies have also agreed to withdraw their support of the ballot.
Null and Void
The ballot measure was pushed by Uber and Lyft and only approved by the Supreme Judicial Court a few hours before the settlement proposal. Now, the ballot will likely be null and void.
Upholding the Agreement
Under the settlement, the companies will also be subjected to compliance reports and annual audits by the Attorney General’s office to ensure they are upholding the terms of the settlement.
Fines and Penalties for Any Violation
If either company is found to violate the agreements, it will incur “any applicable restitution, fines, and penalties,” according to settlement documents.
Underpaid, Without Benefits
“For years, these companies have underpaid their drivers and denied them basic benefits,” said Campbell in a public statement.
Holding Uber and Lyft Accountable
“Today’s agreement holds Uber and Lyft accountable, and provides their drivers, for the very first time in Massachusetts, guaranteed minimum pay, paid sick leave, occupational accident insurance, and health care stipends,” she continued.
Still Independent Contractors
Despite the years of legal disputes and the significant benefits and increased earnings for drivers, the settlement did not meaningfully change the status of Massachusetts drivers, who will still be considered independent contractors under state law.
30% Less on Contractors
While the settlement will likely be gratifying news for many rideshare drivers in Massachusett, studies show companies typically spend as much as 30% less when their workers are independent contractors.
Independent Statements
Both Uber and Lyft have released statements of their own, with Uber praising the settlement for allowing drivers to retain their independence and flexibility, and Lyft calling it a “major victory” for drivers.
What Independent and Flexible Work Should Look Like
“This agreement is an example of what independent, flexible work with dignity should look like in the 21st century,” said Uber’s chief legal officer Tony West. “We are thrilled to see more policymakers supporting portable benefits and innovative frameworks to improve independent work.”
“A Major Victory”
“It is a major victory in a multiyear campaign by Bay State drivers to secure their right to remain independent while gaining access to new benefits,” said Lyft representatives in a company statement.
Looking to Other States
The relative success of the settlement in Massachusetts may be an optimistic sign for drivers in other states, such as California, where similar lawsuits against Uber and Lyft have been tied up in court for several years.
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Featured Image Credit: Shutterstock / Jonathan Weiss.
The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
