Rideshare Companies Have Been Pushed to Raise Pay in States Across the Country

Ride-sharing companies Uber and Lyft have been under pressure to increase pay for their drivers in states across the country. The most recent pay raise came on Thursday in Massachusetts, where drivers secured a guaranteed wage floor and other benefits while remaining independent contractors.

Key Takeaways

• Uber and Lyft have supported ballot measures nationwide that improve driver pay but also solidify their drivers’ status as non-employees.
• A recent deal in Massachusetts will pay drivers a new minimum wage and provide benefits, with drivers maintaining their independent contractor status.
• The pay guarantee is calculated over a two-week period, rather than per ride, to help keep costs lower for riders.

Deal Settles 2020 State Lawsuit

The agreement reached in Massachusetts resolves a 2020 lawsuit filed by the state, which argued that gig-economy drivers should be classified as employees to receive additional benefits and protections under state law. As part of the deal, Uber and Lyft will pay drivers $32.50 per active trip hour and provide benefits such as paid sick leave.

In addition to the wage guarantees, Uber and Lyft agreed to pay Massachusetts a combined $175 million to settle allegations of state wage law violations. While drivers will remain independent contractors, the deal prevents the companies from attempting to change state employment laws through a 2024 ballot initiative.

Uber and Lyft Face Government Action in California and Minnesota

Uber and Lyft have supported ballot initiatives in various states to classify their drivers as independent contractors. In California, Proposition 22 in 2020 solidified this status while offering some benefits. However, the law was invalidated in court in 2021 before being reinstated in 2023, with the case currently before the California Supreme Court.

In Minneapolis, Uber and Lyft threatened to cease operations after the city council passed a minimum wage law for drivers in March due to high operating costs. A compromise was eventually reached that included a more modest pay increase than what was initially proposed in a state law passed in May.

In both Massachusetts and Minnesota, the pay guarantee is calculated over a two-week period rather than per ride, a move that Uber says will help lower costs for riders.

Overall, the push for increased pay for rideshare drivers reflects ongoing debates about the classification of gig workers and the responsibilities companies have toward their workforce. As these companies navigate legal challenges and public pressure, the outcomes of these battles will have significant implications for the future of the gig economy.

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