Uber, Lyft drivers to receive $328M in back pay as part of NY AG settlement

Uber and Lyft will pay their New York drivers a combined $328 million to settle claims the companies illegally deducted taxes and fees over multiple years, state Attorney General Letitia James’ office announced on Thursday.

The major agreements also require the two ride-share giants to offer paid sick leave to their drivers statewide, according to the terms of the deal that settles a state investigation into the companies' tax-withholding practices.

As part of the settlement, Uber and Lyft drivers outside New York City will receive an “earnings floor," or minimum per-ride rate — a version of which the city implemented in 2019.

All of the money in the settlements — $290 million from Uber and $38 million from Lyft — will go to people who drove for Uber from 2014 to 2017 and Lyft from 2015 to 2017.

James' office announced the agreements' terms on Thursday morning, calling the deal the largest wage-theft settlement in the office’s history.

In a statement, James said Uber and Lyft “systematically cheated their drivers out of hundreds of millions of dollars in pay and benefits.”

“These drivers overwhelmingly come from immigrant communities and rely on these jobs to provide for their families,” she said. “This settlement will ensure they finally get what they have rightfully earned and are owed under the law.”

Both Uber and Lyft denied any wrongdoing in the case and the companies praised the settlement as striking a good balance between driver flexibility and providing benefits.

"Choosing flexibility shouldn’t mean folks have to give up protections like sick pay and minimum earnings," said Uber's chief legal officer Tony West said in a prepared statement Thursday. "Today, Uber reached a landmark, first-of-its-kind agreement with New York Attorney General Letitia James, that gets us closer to achieving that goal."

Lyft's chief policy officer Jeremy Bird struck a similar note.

“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 company blog post.

All told, the new agreements will benefit an estimated 100,000 drivers in New York state by providing them back pay, new benefits or both, according to the AG's office.

The settlements result from a state investigation into the companies’ pay practices in the mid-2010s, which was spurred by a complaint by the New York Taxi Workers Alliance, the group representing thousands of for-hire drivers in the city.

According to James’ office, Uber withheld sales tax and fees for New York’s Black Car Fund — which provides for-hire drivers workers' comp protections — from drivers’ pay from 2014 to 2017. And from 2015 to 2017, Lyft deducted a 11.4% “administrative charge” from drivers that was equal to the proper sales tax and Black Car Fund fee, the AG's office alleged.

In both cases, the sales tax and fee was supposed to be tacked onto riders' fares, not deducted from drivers' earnings, James’ office claims.

Under the settlements, eligible drivers will have to file a claim to receive back pay, which could total thousands of dollars, depending on how much they drove for Uber and Lyft during the relevant periods.

The AG’s office says drivers will be notified by mail, email or text message about the opportunity to file claims.

This story has been updated with comment from Uber and Lyft.