State reaches historic settlement with Uber and Lyft

Massachusetts has reached a groundbreaking settlement with ride-hailing giants Uber and Lyft. The agreement resolves years of litigation and will provide drivers with a minimum base pay of $32.50 per hour, along with unprecedented benefits and protections, while allowing them to maintain their status as independent contractors.

Key provisions of the settlement include:

1. Financial settlement: Uber will pay $148 million and Lyft will pay $27 million, for a total of $175 million. The majority of these funds will be distributed as restitution to current and former drivers. (The state attorney general’s office will release details on how drivers can submit claims.)
2. Minimum pay standard: Drivers will be guaranteed a minimum of $32.50 per hour for time spent traveling to pick up riders and transporting them, adjusted annually for inflation. This hourly floor does not apply to the time drivers spend waiting between rides.
3. Paid sick leave: Drivers will earn one hour of sick pay for every 30 hours worked, up to 40 hours per year.
4. Health insurance benefits: Drivers will be eligible for health insurance stipends if they work at least 15 hours per week, pooling their hours across both platforms.
5. Occupational accident insurance: Drivers will receive up to $1 million in coverage for work-related injuries.
6. Paid Family and Medical Leave: Drivers will receive a stipend to buy into the state’s paid family and medical leave program.

In an announcement, Massachusetts Attorney General Andrea Joy Campbell said the settlement stops the threat of a state ballot initiative that could have rewritten state employment law and resulted in inadequate earnings and protections for drivers.

“For years, these companies have underpaid their drivers and denied them basic benefits,” said Campbell in a statement. “Today’s 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.”

Uber’s Chief Legal Officer, Tony West, commented on the settlement: “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.”

Lyft also released a statement, calling the settlement a “major victory” for Bay State drivers, allowing them to remain independent, while gaining access to new benefits.

“This is a huge win for Massachusetts drivers that secures their freedom to earn when, where, and however long they want,” said Jeremy Bird, Lyft’s Executive Vice President of Driver Experience. “Rideshare is truly part of the economic and social fabric of the Commonwealth. We’re thrilled to reach an agreement that works for everyone.”

Under the settlement, the companies are required to provide drivers with information on the length of a trip, the destination, and their expected earnings before they accept a ride. The settlement also includes provisions for anti-discrimination protections and a formalized appeals process. The companies must also offer drivers in-app chat support with a live person in English, Spanish, Portuguese, and French.

Both Uber and Lyft have agreed to implement these changes, with most provisions set to take effect between late 2024 and early 2025. The companies will also cease participation in efforts to pass the ballot initiative that sought to classify drivers as independent contractors.