Uber and Lyft drivers were ‘cheated’ of pay in New York

Ride-sharing firms Uber and Lyft ‘systematically cheated’ drivers in the state of New York out of pay and benefits and will have to pay $328m (£269m) to settle claims.

The New York attorney general’s ruling also means that drivers in the state will receive guaranteed paid sick leave.

Under the settlement – which will see Uber pay $290m and Lyft $38m – neither company will have to admit fault. Both firms deny wrongdoing yet have praised the announcement.

The New York attorney general, Letitia James, called it the largest wage theft settlement in her office’s history.

The outcome is the latest instalment in the long-running debate over the employment status of people working in the gig economy.

James said: “For years, Uber and Lyft systematically cheated their drivers out of hundreds of millions of dollars in pay and benefits while they worked long hours in challenging conditions.”

Uber and Lyft improperly deducted taxes and fees from New York drivers, rather than their passengers, between 2014 and 2017, found the court, which also alleged that the companies failed to provide drivers with paid sick leave, which employees are entitled to in New York law.

James said the money paid by Uber and Lyft will go to “over 100,000 hardworking people”, and she encouraged those eligible to file a claim for funds they might be owed.

Uber added it would pay an undisclosed amount into New York State’s unemployment insurance fund, so drivers and delivery workers have access to unemployment benefits, should they find themselves out of work.

Uber said the agreement on Thursday would serve as a “model for other states”, putting into place rules which mean New York City drivers receive up to 56 hours of paid sick leave per year.

Uber drivers outside of New York will be entitled to an hour of sick leave at full pay for every 30 hours worked and a minimum wage of at least $26 per hour.

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