The state has reached two landmark settlements totaling $328 million with rideshare companies Uber and Lyft for cheating drivers out of hundreds of millions of dollars. The settlements resolve multi-year investigations which found that the companies’ policies withheld hard-earned pay from drivers and prevented them from receiving valuable benefits available under New York labor laws. The settlements announced Thursday will return $328 million in back pay to drivers and institute a minimum driver “earnings floor,” paid sick leave, proper hiring and earnings notices, and other improvements in drivers’ working conditions. 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.
Eligible drivers can file a claim to receive the funds they are owed. Notices concerning the distribution will be delivered to drivers by mail, email and/or text message. Information on the submission, review, and distribution of claims is also available on the Office of the Attorney General’s (OAG) website.
“Rideshare drivers work at all hours of the day and night to take people wherever they need to go,” said New York State Attorney General Letitia James. “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. 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.”
From 2014 to 2017, Uber deducted sales taxes and Black Car Fund fees from drivers’ payments when those taxes and fees should have been paid by passengers. Uber misrepresented the deductions made to drivers’ pay 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 [the passenger] for any tolls, taxes or fees incurred,” though no method to do this was ever provided via the Uber Driver app. Lyft employed a similar method to shortchange drivers from 2015 to 2017, deducting a 11.4 percent “administrative charge” from drivers’ payments in New York equal to the amount of sales tax and Black Car Fund fees that should have been paid by riders. Uber and Lyft also failed to provide drivers with paid sick leave available to employees under New York City and New York state law.
In addition to paying a total of $328 million in back pay to former drivers, under the settlements, Uber and Lyft have agreed to an “earnings floor,” guaranteeing drivers across the state are paid a minimum rate from dispatch to completion of the ride. 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. Drivers operating in New York City already receive minimum driver pay under regulations established by the Taxi & Limousine Commission (TLC) in 2019.
Uber and Lyft drivers will now also receive guaranteed paid sick leave. Drivers will earn one hour of sick pay for every 30 hours worked, up to a maximum of 56 hours per year. Drivers completing rides outside of New York City will be paid a minimum of $26 per hour for sick leave, adjusted annually for inflation. To reflect the New York City minimum driver pay rules that already include an amount for paid time off, drivers completing trips covered by the TLC minimum driver pay rules will be compensated at $17 per hour for sick leave, adjusted annually for inflation. Uber and Lyft will also make updates to their apps to allow drivers to request sick leave through the apps.
Uber and Lyft will also provide drivers with proper hiring notices and earnings statements. The hiring notices will accurately explain the earnings to which drivers are entitled for their work, and the earnings statements will accurately detail the compensation earned for each pay period. The companies will also notify drivers after each ride of the amount paid by the rider. The companies will provide in-app chat support for drivers in multiple languages so they can easily ask questions about their earnings or other work conditions. In addition, drivers will now be able to appeal all deactivations from the Uber and Lyft platforms.
More than 100,000 drivers throughout New York stand to receive settlement funds and the benefits afforded to them under these historic settlements. As a result, these agreements will have a major impact on the economic lives of rideshare drivers, who are predominantly immigrants and often the main source of income for their families. Surveys have shown that in New York City, nine out of ten drivers are immigrants, two-thirds work full-time as drivers, and more than half are the primary breadwinners in their households.
