Uber and Lyft settled a years-long legal dispute with the Massachusetts attorney general on Thursday, agreeing to pay their drivers the state minimum with some benefits.
As part of the settlement, Uber and Lyft will pay $175 million to settle claims that the companies violated state labor laws, and most of the money will be distributed to temporary workers, state officials said in a statement. But in a victory for carriers, drivers will continue to be classified as independent contractors, not employees.
Among the benefits the state won for gig workers were a health insurance plan for drivers who work at least 15 hours a week, an expansion of accident insurance and a $32.50-an-hour minimum wage for time spent on a ride.
The settlement followed similar wage and benefits provisions enacted in New York, California, Washington state, and most recently in Minnesota. Uber and Lyft have spent tens of millions of dollars on local governments to lobby against efforts by workers and labor groups to increase driver wages.
“For years, these companies have underpaid their drivers and denied them essential benefits,” said Massachusetts Attorney General Andrea Joy Campbell. “Today’s agreement holds Uber and Lyft accountable and provides their drivers, for the first time in Massachusetts, a guaranteed minimum wage, paid sick leave, occupational accident insurance and health care stipends.”
The lawsuit was against Uber and Lyft first introduced In 2020 by Maura Healey, former 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 pleased to reach an agreement that works for everyone, and builds on the similar progress we’ve made in states like New York, California, Minnesota and Washington,” said Jeremy Byrd, executive vice president of driver experience at Lyft.
As a result of the settlement, the two companies will avoid a potential fight over a Massachusetts ballot initiative over driver classification in November.
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