Uber and Lyft drivers in Massachusetts will now receive a minimum hourly pay of $32.50, along with paid sick leave, accident insurance, and healthcare stipends, after a $175 million settlement. The settlement comes after a lawsuit by the state’s attorney general that accused the companies of improperly classifying drivers as independent contractors to avoid paying employee benefits.
Uber is set to pay $128 million and Lyft $27 million as part of the agreement, with at least $140 million of that amount being distributed to drivers, accoridng to a report by Reuters.
“In taking this opportunity, we’ve resolved historical liabilities by constructing a new operating model that balances both flexibility and benefits,” said Uber’s chief legal officer Tony West following the announcement of the settlement.
Massachusetts Attorney General Andrea Joy Campbell announced the settlement, emphasizing the importance of fair compensation for the state’s 90,000 Uber and Lyft drivers. Campbell had been advocating for a judicial determination that these drivers qualify as employees under state law, entitling them to employee benefits.
“For years, these companies have underpaid their drivers and denied them basic benefits,” Campbell said in a statement. “Today’s agreement holds Uber and Lyft accountable.”
Governor Maura Healey also praised the settlement, stating, “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.”
The issue of minimum wage laws applying to app-based employees has continued to be heavily debated in the largest metropolitan areas across the country. However criticies, including the app companies, have pointed out that this increase in labor costs will lead to higher prices for consumers and negatively impact businesses in the community.
