Uber and Lyft on Thursday settled a yearlong legal dispute with the Massachusetts attorney general, agreeing to pay their drivers in the state a minimum fare 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 to be distributed to gig workers, state officials said in a statement. But in a victory for the ride-hailing companies, drivers will still be classified as independent contractors rather than employees.
Among the benefits the state secured for its self-employed workers are a health insurance plan for drivers who work at least 15 hours a week, expanded accident insurance and a minimum wage of $32.50 per hour for time spent on a trip.
The agreement followed similar wage 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 governments against efforts by workers and labor groups to raise driver pay.
“For years, these companies have underpaid their drivers and denied them basic benefits,” said Massachusetts Attorney General Andrea Joy Campbell. “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 former attorney general.
In separate statements, Uber and Lyft said the deal 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 and dignified work should look like in the 21st century,” said Tony West, Uber’s chief legal officer, in a statement.
“We’re thrilled 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, executive vice president of driver experience at Lyft.
As a result of the agreement, both companies will avoid a potential ballot initiative fight in Massachusetts over driver classification in November.
