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Settlement: Uber and Lyft drivers in New York will get $328 million in back pay

A MARTÍNEZ, HOST:

Three hundred and twenty-eight million dollars - that's how much Uber and Lyft have agreed to pay in a settlement with the New York attorney general's office over allegations the companies shortchanged its drivers. NPR's Bobby Allyn joins us to discuss the payout and what it could mean for drivers around the country. Bobby, so what was the case against Uber and Lyft?

BOBBY ALLYN, BYLINE: Yeah. Here's what state investigators found - that in New York, Uber and Lyft were taking sales tax and other fees out of the paychecks of drivers, when really that should have been billed to passengers. So that meant rides were less expensive, but it also meant drivers received smaller paychecks. So to resolve that, the companies say up to 100,000 drivers in New York will be eligible for back pay. They'll be compensated from this $328 million fund you mentioned. The AG's office in New York is calling this the state's largest ever wage theft case. I called up Seth Harris to see just how significant this is. He's a professor at Northeastern University and a former top labor adviser to President Biden. And he says the settlement is remarkable, not just for the amount of money.

SETH HARRIS: But the attorney general's use of the case to pressure the companies to agree to the kinds of things that you typically find in employment law.

ALLYN: Yeah, what he's referring to there, A, is a big part of this deal. Uber and Lyft have agreed to pay sick leave and to set minimum wages for drivers. In New York state, that will be $26 an hour, and that's just for time they're driving, not time they're waiting around for passengers.

MARTÍNEZ: Now, we mentioned this happened in New York, but will this help Uber and Lyft drivers outside of New York?

ALLYN: Yeah, the short answer is not yet. But Harris with Northeastern says using a wage theft investigation as leverage to get companies to agree to other worker perks, like New York Attorney General Letitia James did here, could catch on in other states.

HARRIS: Attorney General James has created a blueprint for other attorneys general to pursue wage theft cases against the online-platform ride-share companies.

MARTÍNEZ: All right. What do Uber and Lyft have to say about this?

ALLYN: Yeah, both companies are saying this is a win for workers. And yes, the big pool of back pay money and minimum wage and paid sick leave are victories for workers. But Uber and Lyft got something pretty major out of this, too, right? Uber says that the New York attorney general's office agreed to drop investigations into whether the companies misclassified workers as independent contractors. And remember, this has been a heated topic for years, and it's launched all sorts of legal battles, including a major one in California that is still playing out in the courts over whether ride-share drivers are employees or independent contractors. So it's a significant deal if the New York attorney general's office decided to let that go, and we'll be seeing, A, if, you know, other states choose this middle path and cut similar deals with these companies.

MARTÍNEZ: All right. That's NPR's Bobby Allyn. Bobby, thanks for your reporting on this.

ALLYN: Thank you, A. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

A Martínez
A Martínez is one of the hosts of Morning Edition and Up First. He came to NPR in 2021 and is based out of NPR West.
Bobby Allyn is a business reporter at NPR based in San Francisco. He covers technology and how Silicon Valley's largest companies are transforming how we live and reshaping society.