Massachusetts Uber and Lyft Drivers Secure $32.50 Minimum Wage in Landmark Agreement

Uber Technologies and Lyft have agreed to a $32.50 hourly minimum wage for drivers in Massachusetts and will pay $175 million to settle a lawsuit alleging they improperly classified drivers as independent contractors.

As part of the settlement with Massachusetts Attorney General Andrea Joy Campbell, the companies will also provide drivers with paid sick leave, accident insurance, and healthcare stipends. Additionally, Uber and Lyft have agreed to withdraw support for a ballot initiative that would have cemented app-based drivers’ status as contractors.

In separate statements, Uber and Lyft emphasized that the agreement aligns with drivers’ desires for flexibility while securing key employee benefits. “In taking this opportunity, we’ve resolved historical liabilities by constructing a new operating model that balances both flexibility and benefits,” said Tony West, Uber’s chief legal officer.

Under the settlement, Uber will pay $148 million, while Lyft will pay $27 million. At least $140 million of this total will be distributed to drivers, according to a court filing.

Attorney General Campbell, a Democrat, announced the settlement shortly after Massachusetts’ top court permitted voters to decide on a related industry-backed ballot measure, alongside a competing labor-backed proposal allowing drivers to unionize.

The settlement comes on the eve of closing arguments in a lawsuit filed in 2020 by Campbell’s predecessor, now-Governor Maura Healey, concerning the employment status of drivers. Campbell sought a judicial ruling that Massachusetts’ 55,000 Uber drivers and 35,000 Lyft drivers are employees, entitled to minimum wage, overtime, and sick leave benefits.

“For years, these companies have underpaid their drivers and denied them basic benefits,” Campbell said in a statement. “Today’s agreement holds Uber and Lyft accountable.”

This settlement offers greater benefits and pay for Massachusetts drivers compared to a similar agreement in New York and legislation in Minnesota. Uber and Lyft argued that classifying drivers as employees could force them to reduce or end services in Massachusetts.

Following the settlement announcement, the industry-backed ballot measure committee, Flexibility and Benefits for Massachusetts Drivers, indicated it will no longer pursue the initiative.

Previously, in 2020, a $200 million campaign led by the gig economy companies convinced California voters to pass a measure classifying drivers as independent contractors with some benefits. Litigation over that measure continues.