Uber, Lyft drivers in $175M settlement: $32.50 an hour plus benefits

The Massachusetts settlement follows similar deals the companies reached in other states, including a $328 million settlement with New York in 2023 and a $100 million agreement that Uber reached with New Jersey in 2022.

Drivers are set to receive guaranteed hourly pay of $32.50 along with paid sick leave, a health-care stipend and other benefits as part of the settlement, and most of the $175 million will be distributed to current and former drivers, Massachusetts officials said.

Also under the settlement, Uber and Lyft withdraw support for a proposed statewide ballot initiative that defines their drivers and other app-based drivers as independent contractors.

The suit was filed in 2020 by Attorney General Maura Healey, who is now the governor, alleging that rideshare drivers’ misclassification denied them minimum wage and paid sick time.

Uber was represented in the suit by Littler Mendelson and Gibson, Dunn & Crutcher and Lyft by Wilmer Cutler Pickering Hale and Dorr and Munger, Tolles & Olson.

“For years, these companies have underpaid their drivers and denied them basic benefits,” Attorney General Andrea Joy Campbell said in a statement. She said the 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.”

“Our lawsuit against Uber and Lyft was always about fairness for drivers. I congratulate Attorney General Campbell and her team for securing this settlement that delivers historic wages and benefits to right the wrongs of the past and ensure drivers are paid fairly going forward,” Healey added.

The Details

The $32.50 hourly rate in the settlement, which will be adjusted annually for inflation, applies to time spent traveling to pick up riders and taking them to their destinations but not to time waiting for a rider.

Uber will pay $148 million and Lyft $27 million for restitution for past underpayment.

The pact also calls for drivers to receive a paid stipend to buy into the state’s paid family and medical leave program, and drivers will be allowed to pool their hours driving for the two companies to obtain access to health insurance.

Workers driving at last 15 hours per week for either or both companies will be eligible for a health insurance stipend.

Drivers will also be eligible for up to $1 million in occupational accident insurance coverage, paid by the companies.

Related: Can the gig economy boom without benefits?

‘Flexible Work … in the 21st Century’

Jeremy Bird, Lyft’s executive vice president of driver experience, said in a statement, “This is a huge win for Massachusetts drivers that secures their freedom to earn when, where, and however long they want. On any given day, flexible work on the Lyft platform provides an average 8,500 drivers in Massachusetts the independence to earn while attending school, caring for loved ones, chasing dreams, or providing for their family,” Bird said.

“Rideshare is truly part of the economic and social fabric of the Commonwealth. We’re thrilled to reach an agreement that works for everyone, and builds on similar progress we’ve made in states like New York, California, Minnesota, and Washington,” he added.

Uber’s chief legal officer, Tony West, said in a statement, “This agreement is an example of what independent, flexible work with dignity should look like in the 21st Century. We are thrilled to see more policymakers supporting portable benefits and innovative frameworks to improve independent work.”

“In taking this opportunity,” West said, “we’ve resolved historical liabilities by constructing a new operating model that balances both flexibility and benefits. This allows both Uber and Massachusetts to move forward in a way that reflects what drivers want and demonstrates to other states what’s possible to achieve. We hope to engage other policymakers, drivers, advocates and stakeholders around the world to forge similar solutions.”