New York (CNN) — Thousands of rideshare drivers in New York may be eligible to receive significant back pay from Uber and Lyft as part of a settlement announced by the state attorney general on Thursday.
New York Attorney General Letitia James announced two settlement funds totaling $328 million with rideshare companies Uber and Lyft for allegedly “cheating drivers out of hundreds of millions of dollars” in earnings, according to a statement from her office.
The settlements come as the result of multi-year investigations from the state attorney general’s office into Uber and Lyft, which found the companies’ policies withheld certain pay from drivers and prevented them from receiving some benefits available under New York labor laws.
As part of the settlements, Uber will pay some $290 million and Lyft will pay some $38 million into two separate funds that will be distributed as back pay to current and former drivers. Also as part of the agreement, the rideshare companies will institute improvements in drivers’ working conditions, including a minimum driver “earnings floor,” the attorney general’s office said. While drivers operating in New York City already receive minimum driver pay under current regulations, this means that drivers outside of New York City will receive a minimum rate. Rideshare drivers will now also receive guaranteed paid sick leave.
“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,” Attorney General James said in a statement accompanying the announcement.
“These drivers overwhelmingly come from immigrant communities and rely on these jobs to provide for their families,” James added. “This settlement will ensure they finally get what they have rightfully earned and are owed under the law.”
James’ office accused Uber of deducting sales tax and Black Car Fund fees from drivers’ payments from 2014 to 2017, when those taxes and fees should have been paid by passengers. (The Black Car Fund is a New York state-backed surcharge to cover workers’ compensation and insurance). The investigation also accuses Uber of misrepresenting deductions made to drivers’ pay in their terms of service. James’ office, meanwhile, accuses Lyft of similarly deducting an “administrative charge” from drivers’ payments from 2015 to 2017 in New York that was equal to the amount of sales tax and Black Car Fund fees that should have been paid by riders.
More than 100,000 drivers in New York stand eligible to receive settlement funds and expanded benefits. Citing surveys, the attorney general’s office said nine out of 10 drivers in New York City are immigrants, two-thirds work full-time as drivers and more than half are the primary breadwinners in their households.
Eligible drivers can file a claim to receive the funds from the settlements. Both Uber and Lyft deny any wrongdoing.
Tony West, Uber’s chief legal officer, called the agreement with James’ office a “win for drivers across New York State,” touting how it provides drivers with both flexibility and new benefits going forward.
In a company blog post, West wrote that Uber has long advocated to “change the status quo to allow those who choose platform work to have both the ability to work when, where and how often they want, as well as receive important benefits.”
West said the agreement reached with the New York Attorney General’s office “gets us closer to achieving that goal.”
“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,” West wrote.
Jeremy Bird, Lyft’s chief policy offer, similarly welcomed the agreement.
“This is a win for drivers, and one we are proud to have achieved with the New York Attorney General’s Office,” Bird said in a statement.
“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,” Bird added. “We look forward to continuing this work in order to provide New York drivers the independence and full range of benefits available to those in other states, like California and Washington.”
The statement from the New York Attorney General’s office initially accused the companies of “stealing earnings” from drivers, but later Thursday updated that statement to say “taking earnings” from drivers, and would not comment on the change.