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The companies will pay a combined $328 million in backpay to thousands of current and former drivers as part of twin settlements announced by New York Attorney General Letitia James on Thursday, Nov. 2.
It comes after an investigation found that Uber and Lyft withheld hundreds of millions of dollars from drivers and kept them from receiving benefits available under New York labor laws, according to James.
Specifically, Uber deducted sales taxes and “Black Car Fund” fees from drivers’ payments between 2014 and 2017, when those taxes and fees should have been paid by passengers.
The company then misrepresented those deductions in their terms of service, telling drivers that Uber would only deduct its commission from the drivers’ fare, and that drivers were “entitled to charge passengers for any tolls, taxes, or fees incurred.”
In reality, drivers had no way to enact such charges through the Uber app, the investigation found.
Lyft similarly shorted drivers between 2015 and 2017 by deducting an 11.4 percent “administrative charge” from payments in New York equaling the sales tax and “Black Car Fund” fees that should have been paid by riders.
According to James’ office, the rideshare companies also failed to provide drivers with paid sick leave available to employees under New York City and New York state laws.
“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,” James said.
“These drivers overwhelmingly come from immigrant communities and rely on these jobs to provide for their families. These settlements will ensure they finally get what they have rightfully earned and are owed under the law.”
As part of the settlements, Uber and Lyft also agreed to institute a minimum “earnings floor” for drivers, as well as paid sick leave, proper hiring and earnings notices, and other improvements to working conditions.
Drivers outside of New York City will receive a minimum of $26 per hour, which will be adjusted annually for inflation.
Uber will pay $290 million, and Lyft will put up $38 million into two separate settlement funds available to more than 10,000 current and former drivers.
It marks the largest backpay settlement ever won by the New York State Attorney General's Office.
Eligible drivers can file a claim to receive their funds on the agency's website.
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