Drivers for Uber and Lyft will earn a minimum pay standard of $32.50 per hour under a settlement announced Thursday by Massachusetts Attorney General Andrea Campbell, in a deal that also includes a suite of benefits and protections.
The two companies will also be required to pay a combined $175 million to the state to resolve allegations that the companies violated Massachusetts wage and hour laws, a substantial majority of which will be distributed to current and former drivers.
Campbell said the settlement resolves her office’s yearslong litigation against the two companies and stops the threat of their attempt to rewrite state employment law by a proposed 2024 ballot initiative.
That question would have resulted in drivers receiving inadequate protections and an earnings standard that would not guarantee minimum wage, she said.
“For years, these companies have underpaid their drivers and denied them basic benefits,” Campbell said in a written statement. “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.”
Democratic Gov. Maura Healey said the settlement delivers “historic wages and benefits to right the wrongs of the past and ensure drivers are paid fairly going forward.”
In a statement Lyft said the agreement resolves a lawsuit that recently went to trial, and avoids the need for the ballot initiative campaign this November.
“More importantly, it is a major victory in a multiyear campaign by Bay State drivers to secure their right to remain independent, while gaining access to new benefits,” the company said.
Uber also released a statement calling the agreement “an example of what independent, flexible work with dignity should look like in the 21st century.”
“In taking this opportunity, we’ve resolved historical liabilities by constructing a new operating model that balances both flexibility and benefits,” the company said. “This allows both Uber and Massachusetts to move forward in a way that reflects what drivers want and demonstrates to other states what’s possible to achieve.”
The companies were pushing a ballot question that would classify drivers as independent contractors eligible for some benefits, but Campbell said the settlement stops the threat of the ballot question. A competing ballot question seeks to give drivers the right to unionize in Massachusetts.
Drivers will now earn one hour of sick day pay for every 30 hours worked, up to a maximum of 40 hours per year. As part of the agreement, Uber and Lyft must update their driver applications so drivers are able to view and claim their sick leave directly in the app. Drivers will also receive a stipend to buy into the state’s paid family and medical leave program.
Under the deal, Uber and Lyft will also allow drivers to pool together their hours driving for the two companies to obtain access to a health insurance stipend. Anyone who drives for more than 15 hours per week — for either or both companies — will be able to earn a health insurance stipend to pay for a plan on the Massachusetts Health Connector.
Drivers will be eligible for occupational accident insurance paid by the companies for up to $1 million in coverage for work-related injuries.
The agreement also requires the companies to provide drivers with key information — about the length of a trip, the destination and expected earnings — before they are expected to accept a ride.
The companies are barred from discriminating against drivers based on race, religion, national origin, sex, sexual orientation, gender identity, disability or other protected identities — and can’t retaliate against drivers who have filed a complaint about the companies with the Attorney General’s Office.
The deal also requires the companies to provide drivers in-app chat support with a live person in English, Spanish, Portuguese and French and must provide drivers with information about why they have been deactivated and create an appeals process.