Uber and Lyft to pay $328 million for withholding driver earnings

Uber and Lyft will pay a combined $328 million for withholding earnings from drivers in a settlement with the New York Attorney General. Uber will pay $290 million, while Lyft will pay $38 million.

The money will be distributed to affected drivers, providing back pay and mandatory paid sick leave, along with other benefits. Both companies called the agreement a "win" for drivers and highlighted its historic nature. The settlement addresses improper deductions made from drivers' payments for sales taxes and Black Car Fund fees.

Additionally, Uber and Lyft failed to offer drivers the paid sick leave required by New York law. As part of the agreement, both companies will guarantee an earnings floor, ensuring a minimum rate for drivers, and provide guaranteed paid sick leave. This settlement represents a significant step towards ensuring fair treatment and benefits for rideshare drivers.

What's the matter

From 2014 to 2017, Uber wrongly deducted sales taxes and Black Car Fund fees from drivers' earnings when these charges should have been paid by passengers. Uber misrepresented this in their terms of service, telling drivers that only the company's commission would be deducted from fares, and drivers could charge passengers for tolls, taxes, or fees, even though no method was provided via the Uber Driver app. Lyft similarly underpaid drivers from 2015 to 2017, deducting an 11.4% "administrative charge" from their payments, equivalent to the sales tax and Black Car Fund fees riders should have paid. Additionally, both Uber and Lyft failed to provide drivers with paid sick leave, a legal requirement in New York City and New York state.