BOSTON, MA — Uber and Lyft have reached a landmark $175 million settlement with Massachusetts, impacting the classification and benefits of their drivers. This settlement, announced on June 27, concludes a multi-year legal battle initiated by the Massachusetts Attorney General’s office, which sought to classify rideshare drivers as employees rather than independent contractors. The resolution allows drivers to maintain their independent contractor status while gaining important employee benefits.
As a result of the settlement, Uber and Lyft will pay a combined $175 million to the state of Massachusetts, with the majority of the funds being distributed to current and former drivers. The attorney general’s office will soon provide details on how drivers can file claims for their share of the settlement.
Additionally, the settlement sets a minimum wage of $32.50 per hour for drivers’ time spent picking up and driving passengers. This wage will not apply to waiting times between rides and will be adjusted annually for inflation.
Moreover, this settlement introduces several new benefits designed to enhance the working conditions for rideshare drivers including but not limited to:
- Paid Sick Leave: Drivers can earn up to one hour of sick pay for every 30 hours worked, capped at 40 hours per year.
- Paid Family and Medical Leave: Drivers will receive a stipend to buy into the Commonwealth’s Paid Family and Medical Leave program.
- Health Insurance: Drivers working more than 15 hours per week will qualify for health insurance stipends.
- Occupational Accident Insurance: Drivers will have access to up to $1 million in coverage for work-related injuries, funded by Uber and Lyft.
The Massachusetts settlement marks a significant milestone in the ongoing evolution of gig economy jobs, providing a precedent for balancing flexibility and worker benefits.
This settlement avoids a court ruling that could have forced Uber and Lyft to classify their drivers as employees, preserving the flexibility of the independent contractor model while enhancing driver protections. As part of the agreement, Uber and Lyft will withdraw support for a 2024 Massachusetts ballot referendum that sought to codify gig workers as independent contractors under state law.
The settlement serves as a potential model for other states and gig economy companies, balancing the maintenance of independent contractor status with significant worker benefits. Similar cases and legislative efforts in other regions may be influenced by this outcome, promoting a hybrid approach to gig worker classification.
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