Uber and Lyft settled a years-long legal battle with Massachusetts' attorney general on Thursday, agreeing to pay a minimum wage and certain benefits to drivers in the state.
As part of the settlement, Uber and Lyft will pay $175 million to resolve allegations that the companies violated state labor laws, with most of the money going to gig workers, state officials said in a statement. But in a win for the ride-hailing companies, drivers will continue to be classified as independent contractors rather than employees.
Among the benefits the state has won for gig workers are health insurance for drivers who work at least 15 hours a week, expanded accident insurance and a minimum pay rate of $32.50 per hour for rides.
The settlement follows similar wage and benefit provisions enacted in New York, California, Washington state and, most recently, Minnesota. Uber and Lyft have spent tens of millions of dollars lobbying local governments against efforts by workers and labor groups to raise wages for drivers.
“For years, these companies have underpaid their drivers and failed to provide basic benefits,” Massachusetts Attorney General Andrea Joy Campbell said. “Today's agreement holds Uber and Lyft accountable and, for the first time in Massachusetts, guarantees drivers a minimum wage, paid sick leave, workers' compensation insurance and health care benefits.”
The lawsuit against Uber and Lyft was first filed in 2020 by former Attorney General Maura Healey.
In separate statements, Uber and Lyft said the settlement was a win for drivers and that maintaining their independent contractor status was important for flexibility.
“This agreement is an example of what dignified, independent and flexible work should look like in the 21st century,” Uber's chief legal officer Tony West said in a statement.
“We are excited to reach an agreement that is beneficial for everyone, building on similar progress we've made in states like New York, California, Minnesota and Washington,” said Jeremy Byrd, Lyft's executive vice president of Driver Experience.
The settlement allows the two companies to avoid a fight in November over a Massachusetts referendum on driver classification.