Uber, Lyft drivers to get $32.50 an hour minimum pay and benefits in Massachusetts

Uber and Lyft drivers will now get a minimum pay standard of $32.50 per hour and several other benefits under a settlement between the companies and Massachusetts Attorney General Andrea Campbell. The two companies on Thursday also agreed to pay $175 million to settle the lawsuit brought on by the attorney general which accused the companies of improperly treating drivers as independent contractors to give lower compensations and fewer benefits.

Years Long Litigation Brings Relief for Drivers

The agreement settles a 2020 lawsuit filed by the state of Massachusetts that sought gig-economy drivers to be classified as employees. The lawsuit argued that gig workers should be entitled to additional benefits and protections provided under the state law. The lawsuit opposed the attempts of Uber and Lyft to lock in drivers as independent contractors.

Now that the settlement has been reached, Uber and Lyft have agreed to stop funding or supporting a ballot initiative that would have asked voters in November to lock the app-based drivers’ status as contractors, Attorney General Andrea Campell said, as per a CNN report.

Uber and Lyft have issued separate statements regarding the agreement. “In taking this opportunity, we’ve resolved historical liabilities by constructing a new operating model that balances both flexibility and benefits,” Uber’s chief legal officer Tony West wrote in a statement.

Apart from providing benefits, Uber will pay $148 million, and Lyft will pay $27 million to the state of Massachusetts. Furthermore, about $140 million will also be paid out to the drivers, CNN reported citing a court filing.

A Suit of Benefits for Drivers

Apart from the raised hourly pay, drivers will now get one hour of sick day pay (up to 40 hours a year) for every 30 hours of work. Uber and Lyft will also update their driver applications to allow drivers to view and claim their sick leaves directly from the app’s dashboard.  Drivers will also get a healthcare stipend to become a member of the state’s paid family and medical leave program.

Drivers will be eligible for occupational accident insurance coverage of up to $1 million for work-related injuries, paid for by the companies.

The agreement also mandates the companies to provide key information like the length, and duration of the trip, the destination, and expected earnings before they accept the ride. Other information such as the reasoning behind a driver’s deactivation will also be provided. Drivers will be able to create an appeals process in case of deactivation and they will get in-app chat support in English, Spanish, Portuguese, and French.

Uber and Lyft’s Battle

This is not the first time that Uber and Lyft faced government action. The two companies have pushed for ballot initiatives across the country to fixate on the status of their drivers as independent contractors.

In California, the companies succeeded as the status was enshrined while providing some benefits to the drivers. However, the law was later invalidated and reinstated in 2023. The case is currently with the California Supreme Court, as per Investopedia.

While in Minneapolis, both Uber and Lyft threatened to shut down their services after the city council passed a minimum wage for all drivers. The companies reached a similar deal and agreed to pay a modest wage increase.