Starting August 15, Massachusetts rideshare drivers will receive a minimum hourly wage of $32.50 and additional benefits, following a settlement between the state and companies Uber and Lyft.
This agreement comes four years after Attorney General Andrea Campbell initiated a lawsuit against these rideshare giants, challenging the classification of drivers as independent contractors rather than employees. Despite the settlement favoring enhanced compensation, drivers will maintain their status as independent contractors.
Under the terms of the settlement, Uber and Lyft have committed to a collective payout of $175 million, primarily designated for “current and former drivers who were underpaid,” as announced by Campbell’s office. Detailed eligibility and application procedures will be disclosed in the upcoming weeks.
The settlement does not change the fundamental contractor status of the drivers but introduces employee-style benefits, including:
- Inflation-adjusted annual wage increases
- Up to 40 hours of sick leave annually, compensated at $20 per hour
- Stipends to purchase healthcare and participate in the state’s family and medical leave program
- Coverage for work-related injuries
To ensure adherence to the agreement, Uber and Lyft are required to conduct yearly audits and report back to the Attorney General’s office. Non-compliance could result in fines, penalties, and restitution.
This regulatory shift in Massachusetts contrasts with the situation in California, where rideshare companies successfully lobbied for a 2020 law exempting them from treating gig workers as employees.
The Massachusetts settlement explicitly prohibits Uber and Lyft from supporting similar legislative initiatives, aligning with recent retreats from such campaigns by other gig economy players like DoorDash and Instacart, as reported by WBUR.
Featured Image courtesy of ROBYN BECK/AFP via Getty Images