Uber and Lyft settled a years-long legal battle with the attorney general in Massachusetts on Thursday, agreeing to pay their drivers in the state a minimum rate with some 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 distributed to gig workers, state officials said in a statement. But in a win for trucking companies, drivers will continue to be classified as independent contractors rather than employees.
Among the benefits the state won for its workers were a health insurance program for drivers who work at least 15 hours a week, expanded accident insurance and a minimum wage of $32.50 an hour for time spent on a ride.
The settlement 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 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 in Massachusetts, with a guaranteed minimum wage, paid sick leave, workers’ compensation insurance and health care stipends.”
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 settlement was a win for their drivers and that maintaining independent contractor status was important for flexibility.
“This agreement is an example of what independent, flexible work with dignity should look like in the 21st century,” Tony West, Uber’s chief legal officer, said in a statement.
“We’re excited to reach an agreement that works for everyone and builds on similar progress we’ve made in states like New York, California, Minnesota and Washington,” said Jeremy Bird, Lyft’s executive vice president of driver experience.
As a result of the settlement, both companies will avoid a potential battle over Massachusetts’ driver classification initiative in November.
