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Uber, Lyft to pay $328M in settlement with New York AG Letitia James over wage theft allegations

New York Attorney General Letitia James reached a historic $328 million settlement with rideshare companies Uber and Lyft, which were accused of stealing earnings from drivers.

Uber and Lyft will pay a combined $328 million to New York state in a settlement over allegations they stole drivers' wages.

The rideshare companies will also provide mandatory paid sick leave and provide other benefits to employees under New York state law, Attorney General Letitia James' office said Thursday.

Uber will pay $290 million and Lyft will fork over $38 million in what the Office of the Attorney General (OAG) called the largest wage theft settlement ever won. The money will return to drivers as back pay and more than 100,000 drivers are eligible to receive settlement funds, according to the OAG.

"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," James said in a statement. 

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"These drivers overwhelmingly come from immigrant communities and rely on these jobs to provide for their families. These settlements will ensure they finally get what they have rightfully earned and are owed under the law. My office will continue to make sure that companies operating in the so-called ‘gig economy’ do not deprive workers of their rights or undermine the laws meant to protect them," she said.

The settlements come after a multiyear investigation led by James' office amid clashes between regulators and companies over what rights "gig economy" workers are entitled to. 

New York state alleged that from 2014 to 2017, Uber wrongly deducted sales taxes and Black Car Fund fees from divers' payments instead of having passengers pay those fees. The OAG accused Lyft of similarly stealing earnings from drivers, pointing to an 11.4% "administrative charge" deducted from drivers' payments in New York from 2015 to 2017, which was equal to the amount of sales tax and Black Car Fund fees that should have been paid by riders. 

Both companies were also accused of failing to provide drivers with paid sick leave, as required by New York law. 

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In addition to the $328 million settlement, Uber and Lyft agreed to establish an "earnings floor" to guarantee drivers minimum compensation for each ride. The companies will also provide sick leave and other benefits.

Uber praised the "landmark, first-of-its-kind" settlement as a "win for drivers" that will help resolve how their employees should be classified under New York law. 

"This helps put to rest the classification issue in New York and moves us forward with a model that reflects the way people are increasingly choosing to work. It also will serve as a model for other states, demonstrating that when we work together with legislators and regulators, we can resolve these issues in a way that benefits workers and consumers alike," Uber chief legal officer Tony West wrote in a statement.

"This is a win for drivers, and one we are proud to have achieved with the New York Attorney General’s Office," said Jeremy Bird, Lyft chief policy officer. "New York has long been a leader in providing drivers portable benefits through flexible earning opportunities with its Black Car Fund, and this agreement expands upon that foundation." 

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Under the settlement, divers outside of New York City will earn at least $26 per hour while en route to a rider or with a rider in the vehicle. Drivers in New York will also receive up to 56 hours of paid sick leave per year, the OAG said. 

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Representatives for the New York Taxi Workers Alliance (NYTWA), a union representing rideshare drivers, called the settlement a "historic victory." 

"We are thrilled that our members won this historic victory to recover their stolen income," said NYTWA Executive Director Bhairavi Desai. "For years, our union has been fighting to recover stolen wages for New York City Uber and Lyft drivers who were cheated out of better living conditions, timely meals, rest and leisure. We're proud to be the union that fights for New York City drivers, and we're thankful to Attorney General Letitia James, who stood by workers, believed in our complaint and understood the urgency of this recovery." 

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