BOSTON (AP) — Drivers for Uber (UBER) and Lyft (LYFT) will earn a minimum wage of $32.50 an hour, Massachusetts Attorney General Andrea Campbell announced Thursday. The deal also includes a host of benefits and protections.
The two companies will also have to pay a combined $175 million to the state to resolve allegations that the companies violated Massachusetts wage and hour laws, a significant portion of which will be paid to current and former drivers.
Campbell said the settlement ends her office’s years-long lawsuit against the two companies and ends their threat to rewrite the state’s labor law with a proposed referendum in 2024.
That demand would have resulted in drivers receiving inadequate protections and an income standard that would not guarantee a minimum wage, she said.
“For years, these companies have underpaid their drivers and denied them basic benefits,” Campbell said in a written statement. “Today’s agreement holds Uber and Lyft accountable and, for the first time ever in Massachusetts, provides their drivers with a guaranteed minimum wage. paid sick leave, workers’ compensation insurance and health benefits.”
Democratic Gov. Maura Healey said the settlement “provides historic wages and benefits to right the wrongs of the past and ensure drivers are paid fairly in the future.”
In a statement, Lyft said the agreement resolves a lawsuit that was recently filed in court and avoids the need for a ballot initiative campaign in November.
“More importantly, it is a major victory in a years-long campaign by Bay State drivers to secure their right to remain independent while gaining access to new benefits,” the company said.
Uber also released a statement calling the agreement “an example of what independent, flexible and dignified work should look like in the 21st century.”
“In seizing this opportunity, we resolved historical liabilities by building a new operating model that balances both flexibility and benefits,” the company said. “This allows both Uber and Massachusetts to move forward in a way that reflects what drivers want and shows other states what it’s possible to achieve.”
The companies were pursuing a ballot question that would classify drivers as self-employed and eligible for certain benefits, but Campbell said the settlement stops the threat of the ballot question. A competing ballot question seeks to give drivers the right to unionize in Massachusetts.
Drivers will now receive one hour of sick leave for every 30 hours worked, up to a maximum of 40 hours per year. As part of the agreement, Uber and Lyft must update their driver applications so drivers can view and claim their sick leave directly in the app. Drivers will also receive a stipend to participate in the state’s paid family and medical leave program.
Under the deal, Uber and Lyft will also allow drivers to combine their driving hours, giving the two companies access to a health insurance benefit. Anyone who drives more than 15 hours per week – for one or both companies – can earn a health insurance reimbursement to pay for a subscription to the Massachusetts Health Connector.
Drivers are eligible for company-paid workers’ compensation insurance with up to $1 million in coverage for work-related injuries.
The agreement also requires the companies to provide drivers with important information – about the duration of a trip, the destination and expected revenue – before they are expected to accept a ride.
Companies may not discriminate against drivers based on race, religion, national origin, sex, sexual orientation, gender identity, disability or other protected identities, nor may they retaliate against drivers who file a complaint about the companies with the attorney general’s office.
The deal also requires the companies to provide drivers with in-app chat support with a live person in English, Spanish, Portuguese and French, provide drivers with information about why they were deactivated and set up an appeals process.
