Uber And Lyft To Pay $328M To Settle Wage Theft Lawsuit
Ride-hailing giants Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) have agreed to pay $328mn to settle wage theft accusations filed…
Ride-hailing giants Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) have agreed to pay $328mn to settle wage theft accusations filed by the Attorney General of New York state. Uber will pay $290mn, and Lyft will pay $38mn into two separate funds to be distributed wholly to former and current drivers.
Over 100,000 drivers in New York will be eligible to receive money from the settlement. The New York Attorney General’s office said it’s the largest wage-theft settlement it has won.
The fines will resolve multi-year investigations spearheaded by New York Attorney General Letitia James. According to James, Uber and Lyft deducted sales taxes and compensation insurance fees from drivers’ earnings when passengers should have paid them. Both companies also failed to offer mandatory paid sick leave under New York law.
As part of the settlement, Uber and Lyft have agreed to pay at least $26 per hour, adjusted annually for inflation, to drivers outside New York City (NYC). Before now, NYC had already set a minimum pay rate for drivers working within city limits.
Uber and Lyft have also agreed to provide guaranteed paid sick leave for New York drivers; they’ll earn one hour of sick pay for every 30 hours worked, for up to 56 hours yearly. Sick leave pay will be $17 per hour, adjusted annually for inflation, and both companies will allow drivers to request sick leave from their apps.
- Uber is the biggest ride-hailing app in the U.S., and Lyft is the second. The former has a 74% market share, and the latter controls the rest, according to Bloomberg Second Measure.
- Uber reported a $9bn net loss on $32bn in revenue in 2022, and Lyft reported a $1.6bn net loss on $4.1bn in revenue in the same year.
Uber reported its first-ever operating profit of $326mn in the second quarter of 2023, helped by its food delivery division. Lyft posted its first operating profit in the first quarter of 2021.
Wage theft is a significant problem but is often hard to detect because of the complexities of employee remuneration. Since 2019, the U.S. Department of Labor has recouped over $700mn in back pay from thousands of employers, according to our analysis of publicly available data.