Uber, Lyft agree to pay drivers $328 million to settle with drivers

American ride-hailing companies Uber and Lyft have agreed to pay drivers a settlement of approximately 328 million U.S. dollars in relation to the practice of passing service fees, which should have been borne by passengers, onto drivers and deducting them from drivers' earnings. Although Uber and Lyft have maintained that this practice was not illegal, they approached a settlement with the drivers after prosecutorial investigations intensified.

According to The New York Times on Thursday (local time), Uber and Lyft have agreed to create a fund totaling 328 million dollars to be paid as settlements to current and former drivers residing in New York State. Uber has pledged 290 million dollars, while Lyft has agreed to contribute 38 million dollars. The number of New York State drivers eligible for the settlement is said to exceed 100,000.

Previously, the New York Taxi Workers Alliance (NYTWA) had raised issues, claiming that Uber and Lyft were deducting 11.4% of the service fees that should have been paid by passengers from the drivers' income, among other illegal actions. There were also allegations that they failed to provide paid leave guaranteed by New York State law. Consequently, the New York State Attorney General's Office commenced an investigation in 2020. It is reported that the office found probable cause for illegal fee charges by Uber from November 2014 to May 2017, and by Lyft from October 2015 to July 2017.

Beyond the financial settlement, Uber and Lyft have also agreed to provide drivers with one hour of paid leave for every 30 hours worked, up to a maximum of 56 hours annually. Tony West, Uber's Chief Legal Officer, stated in a release that "this agreement will serve as a model for other states." Following the settlement, the New York State Attorney General's Office concluded its investigations into the two companies.

Domestically, Kakao Mobility, South Korea's leading mobility platform, also recently announced a complete overhaul of its service fee system, which charged taxi drivers a 3-5% fee, amid intense pressure from regulatory authorities.


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