Uber, Lyft agree to minimum pay for Massachusetts drivers

(Reuters) — Uber Technologies and Lyft agreed Thursday to adopt a $32.50 hourly minimum pay standard for Massachusetts drivers and pay $175 million to settle a lawsuit by the state’s attorney general alleging they improperly treated drivers as independent contractors who can legally receive lower compensation than employees.

The companies also agreed to give drivers paid sick leave, accident insurance, and healthcare stipends and to stop funding or supporting a ballot initiative that would have asked voters in November to cement app-based drivers’ status as contractors, Attorney General Andrea Joy Campbell said.

Uber and Lyft in separate statements said the agreement reflected the desire of most drivers to work on their own terms while receiving many of the key benefits that are legally guaranteed to employees.

“In taking this opportunity, we’ve resolved historical liabilities by constructing a new operating model that balances both flexibility and benefits,” said Tony West, Uber’s chief legal officer.

The agreement requires Uber to pay $148 million and Lyft to pay $27 million to the state. At least $140 million will be paid out to drivers, according to a court filing.