Uber, Lyft agree to pay $175M settlement in Mass. employee classification lawsuit

Uber Lyft settlement overview: 

• Who: Uber Technologies and Lyft Inc. agreed to pay a combined $175 million last month to end claims brought against the rideshare companies by the state of Massachusetts. 
• Why: Massachusetts claimed Uber and Lyft underpaid their drivers by misclassifying them as independent contracts when they were qualified to be employees under state law. 
• Where: The settlement ends a complaint filed against Uber and Lyft in Massachusetts. 

Rideshare companies Uber and Lyft agreed to pay a combined $175 million dollars last month to resolve claims they misclassified and underpaid their drivers. 

The settlement ends a lawsuit brought against Uber and Lyft by the state of Massachusetts, which argued Uber and Lyft misclassified drivers as independent contractors when they were qualified to have been classified as employees. 

In addition to the funds, the settlement agreement provides Uber and Lyft drivers with upgraded benefits, including a new minimum wage of $32.50 per hour, among other things.  

“Today’s agreement holds Uber and Lyft accountable, and provides their drivers, for the first time in Massachusetts, guaranteed minimum pay, paid sick leave, occupational accident insurance and healthcare stipends,” Massachusetts Attorney General Andrea Joy Campbell said in a statement. 

Uber, Lyft must provide drivers with more information about trips before they are taken 

Per the agreement, Uber will pay $148 million and Lyft will pay $27 million in total restitution for current and former drivers that were allegedly underpaid. 

Uber and Lyft must also now provide drivers with more information about their trips before they take them, including their length, final destination and their expected total earnings. 

Among other mandates, the companies are also barred from discriminating or retaliating against drivers and must make available an in-app chat with live support from a person in either English, Spanish, Portuguese or French, according to the settlement. 

The settlement also ended a ballot measure that was backed by Uber and Lyft that would have asked voters in Massachusetts whether drivers for a rideshare or ride-hailing company should remain classified as independent contractors, reports Law360. 

A union-backed ballot measure that could allow drivers to unionize and collectively bargain was reportedly unaffected by the settlement. 

Uber previously agreed to pay $8.44 million in 2022 to end claims the company misclassified its drivers in the state of California as independent contractors. 

Have you ever been misclassified as an independent contract by Uber or Lyft? Let us know in the comments.

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