NEW YORK: Uber and Lyft will pay $328 million to settle a New York probe alleging that the companies “cheated” drivers in an accord that also establishes paid sick leave, state officials announced on Thursday.

The agreement — which was hailed by Uber as a “landmark” in codifying rules around gig work — follows state investigations that found the companies improperly deducted sums from drivers that should have been charged to passengers, New York Attor­ney General Letitia 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,” James said in a statement.

“These settlements will ensure they finally get what they have rightfully earned and are owed under the law.” The settlement means that the rail hailing companies do not have to admit fault.

From 2014 to 2017, Uber “misrepresented” deductions for sales taxes and for the Black Car Fund programme for drivers. Lyft employed a similar system to “shortchange” drivers, the statement from James said. Under the agreement Uber will pay $290 million and Lyft will pay $38 million.

The agreement also ensures a minimum of $26 per hour for workers outside New York City and establishes a system where drivers will earn one hour of sick pay for every 30 hours worked.

Uber’s statement praised the accord without mentioning the investigation into worker pay or the payout to employees.

This resolution “balances accountability and innovation while addressing the true needs of these hard-working drivers in New York,” said Uber Chief Legal Officer Tony West. West described the deal as a “landmark, first-of-its-kind agreement to ensure protections like sick pay and minimum earnings in gig work.

Published in Dawn, November 3rd, 2023