(Reuters) — Uber and Lyft will pay a combined $328 million to settle claims by New York’s attorney general that the ride-sharing companies systematically cheated drivers out of pay and benefits.
Attorney General Letitia James said Uber will pay $290 million, and Lyft will pay $38 million to resolve her office’s multi-year investigation into the companies, calling it the largest wage theft settlement in her office’s history.
Drivers will also be guaranteed minimum hourly rates and paid sick leave. They will also be given notices and in-app chat support to address questions about earnings and other working conditions.
Ms. James’ probe addressed claims that Uber and Lyft improperly collected some taxes and fees from New York drivers rather than passengers.
It also addressed the companies’ practices of classifying drivers as independent contractors instead of employees.
More than 100,000 current and former drivers in the state are eligible to benefit from the settlements.
Uber and Lyft, both based in San Francisco, denied wrongdoing, and called their settlements a “win” for drivers.
Shares of both companies rose following the settlements, with
Tony West, Uber’s chief legal officer, said in a statement that Uber’s settlement “helps put to rest” the classification issue and will be a model for other states.
Lyft said in a separate statement it believes it has always properly classified drivers as independent contractors.
Uber and Lyft have long defended against claims nationwide that they shortchange drivers, many of whom are immigrants, out of pay and benefits, including by refusing to classify them as employees.
Both companies have said many of their drivers prefer working as independent contractors.
In a separate development, Uber agreed with the New York State Department of Labor to begin making quarterly payments to a state insurance fund to ensure that unemployed drivers receive benefits. The amount of Uber’s payments was not disclosed.
