On November 2, New York Attorney General Letitia James announced that rideshare companies Uber and Lyft will pay a combined $328 million to settle claims that the companies cheated its drivers out of pay and benefits.

The settlements resolve a multi-year investigation by James’ office into the companies that found that, from 2014 to 2017, Uber deducted sales taxes and Black Car Fund fees from its drivers’ wages when those taxes and fees are meant to be paid by passengers. The company also misrepresented the deductions made to drivers’ wages in its terms of service by telling drivers it would only deduct its commission from the drivers’ fare, rather than his or her pay. Uber also told its drivers they were “entitled to charge [the passenger] for any tolls, taxes or fees incurred,” though no method was ever provided to do so in the app.

Lyft engaged in similar practices from 2015 to 2017, deducting an 11.4 percent “administrative charge” from drivers’ payments in New York equal to the amount of sales tax and Black Car Fund fees.

Uber will pay $290 million, and Lyft will pay $38 million into separate settlement funds entirely for the purpose of repaying its current and former New York drivers. More than 100,000 drivers in the state are eligible to benefit from the settlements.

“Rideshare drivers work at all hours of the day and night to take people wherever they need to go,” said Attorney General James. “For years, Uber and Lyft systematically cheated their drivers out of hundreds of millions of dollars in pay and benefits while they worked long hours in challenging conditions,” she added, “These settlements will ensure they finally get what they have rightfully earned and are owed under the law.”

The companies also agreed to provide its drivers with additional improvements to working conditions including guaranteed minimum hourly rates, paid sick leave (which New York employees are entitled to), and in-app chat support to address questions about earnings and other working conditions.

Uber and Lyft have received criticism for years for the treatment of their drivers, many of whom are immigrants, including their refusal to classify their drivers as employees. By classifying its employees as independent contractors, rideshare companies avoids having to withhold or pay any taxes on payments to its drivers. Independent contractors also do not possess the rights of an employee under federal and state employment labor laws.

However, both Uber and Lyft have claimed that many of their drivers prefer working as independent contractors.

For help with your small business’s legal needs, contact the clinic at businessclinic@elon.edu.

 

 

 

 

 

Comments are closed.