Uber and Lyft settled a years-long legal dispute with the Massachusetts attorney general on Thursday, agreeing to pay their drivers in the state a minimum rate with certain benefits.
As part of the settlement, Uber and Lyft will pay $175 million to resolve allegations that the companies violated state labor laws, with most of the money to be distributed to gig workers, state officials said in a note. But if ride-hailing companies win, drivers will continue to be classified as independent contractors and not employees.
Among the benefits the state obtained for its self-employed workers were a health insurance plan for drivers who work at least 15 hours a week, extended accident insurance and a minimum hourly wage of $32.50 per hour. time spent travelling.
The agreement followed similar pay and benefits provisions enacted in New York, California, Washington State and, most recently, Minnesota. Uber and Lyft have spent tens of millions of dollars lobbying local government against efforts by workers and labor groups to raise driver pay.
“For years, these companies have underpaid their drivers and denied them basic benefits,” said Andrea Joy Campbell, Massachusetts Attorney General. “Today’s settlement holds Uber and Lyft accountable and provides their drivers, for the first time ever in Massachusetts, a guaranteed minimum wage, paid sick leave, workers’ compensation insurance, and health benefits.”
The lawsuit against Uber and Lyft was first filed in 2020 by Maura Healey, the previous attorney general.
In separate statements, Uber and Lyft said the deal was a win for their drivers and that maintaining independent contractor status was important for flexibility.
“This settlement is an example of what independent, flexible and dignified work should look like in the 21st century,” Tony West, Uber’s chief legal officer, said in a statement.
“We are thrilled to have reached an agreement that works for everyone and builds on similar progress we have made in states like New York, California, Minnesota, and Washington,” said Jeremy Bird, Lyft’s executive vice president of driver experience.
Thanks to the agreement, both companies will avoid a possible electoral battle in Massachusetts over driver classification in November.