Massachusetts Settlement Ensures Uber and Lyft Drivers Earn $32.50 Per Hour

Uber and Lyft drivers in Massachusetts will now earn a minimum of $32.50 per hour following a landmark settlement announced by Massachusetts Attorney General Andrea Campbell. This agreement also introduces a range of benefits and protections for drivers, marking a significant step in the gig economy landscape.

The settlement requires the companies to pay a combined $175 million to the state, addressing allegations that Uber and Lyft violated Massachusetts wage and hour laws. A substantial portion of this sum will be distributed among current and former drivers, rectifying past underpayments and ensuring fair compensation going forward.

Attorney General Campbell stated that this settlement concludes her office's prolonged litigation against Uber and Lyft and prevents the companies from pursuing a proposed 2024 ballot initiative. The initiative, according to Campbell, would have resulted in insufficient protections and earnings standards for drivers, failing to guarantee a minimum wage.

“For years, these companies have underpaid their drivers and denied them basic benefits,” Campbell said. “Today’s agreement holds Uber and Lyft accountable, and provides their drivers, for the very first time in Massachusetts, guaranteed minimum pay, paid sick leave, occupational accident insurance, and health care stipends.”

Massachusetts Governor Maura Healey praised the settlement, highlighting its role in delivering “historic wages and benefits to right the wrongs of the past and ensure drivers are paid fairly going forward.”

In response to the settlement, Lyft stated that the agreement resolves a lawsuit that recently went to trial and obviates the need for the upcoming ballot initiative campaign. The company emphasized the victory for Bay State drivers in securing their right to remain independent while gaining access to new benefits.

Uber also responded positively, describing the agreement as “an example of what independent, flexible work with dignity should look like in the 21st century.” The company noted that the settlement allows both Uber and Massachusetts to move forward in a manner that reflects drivers' desires and sets a precedent for other states.

Under the new agreement, drivers will earn one hour of sick pay for every 30 hours worked, up to a maximum of 40 hours per year. Uber and Lyft will update their driver applications to allow drivers to view and claim their sick leave directly through the app. Additionally, drivers will receive stipends to buy into the state's paid family and medical leave program.

The settlement also provides a mechanism for drivers to pool their hours worked for both companies to qualify for a health insurance stipend. Drivers working more than 15 hours per week will be eligible for this stipend, facilitating access to health insurance plans through the Massachusetts Health Connector.

Furthermore, the agreement mandates that Uber and Lyft provide occupational accident insurance, covering up to $1 million for work-related injuries. The companies are also required to offer drivers crucial information about trip details, including length, destination, and expected earnings, before ride acceptance.

Uber and Lyft are prohibited from discriminating against drivers based on race, religion, national origin, sex, sexual orientation, gender identity, disability, or other protected identities. They must also refrain from retaliating against drivers who file complaints with the Attorney General’s Office.

The settlement includes a requirement for the companies to provide in-app chat support with live personnel in English, Spanish, Portuguese, and French, ensuring effective communication with drivers. Moreover, the companies must inform drivers of the reasons for any deactivation and establish an appeals process for such decisions.

This settlement not only addresses historical grievances but also establishes a new operating model that balances flexibility with essential benefits. It sets a significant precedent, illustrating how gig economy companies can evolve to meet the needs of their workforce while maintaining operational efficiency. As Massachusetts moves forward with this new framework, it may serve as a blueprint for other states grappling with similar issues in the rapidly evolving gig economy.