Uber and Lyft agreed to a number of worker benefits on Thursday in order to end a lengthy legal challenge in Massachusetts over drivers’ employment status as independent contractors.
The two gig giants will pay workers a minimum of $32.50 per hour for active driving time, offer paid sick leave, and provide a stipend for health insurance, along with other benefits, according to a release from the Massachusetts Attorney General Andrea Campbell. Uber and Lyft will also pay a combined $175 million to the state to resolve allegations that they violated wage and hour laws. A “substantial majority” of that will go to current and former drivers, the office said.
“We’re thrilled to reach an agreement that works for everyone,” Jeremy Bird, Lyft’s executive vice president of driver experience, said in a blog post.
The settlement ends what’s been a longstanding state lawsuit that recently went to trial. It’s a win for the gig companies, which have worked for years to essentially carve out a new type of employment. Gig workers would gain access to some traditional benefits, like paid sick leave, but the companies would still be able to call them independent contractors. That could help them avoid the expensive overhead costs that hiring workers as traditional employees would bring on, especially as these companies look to turn a profit.
“This agreement is an example of what independent, flexible work with dignity should look like in the 21st century,” Uber’s Chief Legal Officer Tony West said in a separate release. “We are thrilled to see more policymakers supporting portable benefits and innovative frameworks to improve independent work.”
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