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In a landmark agreement, ride-hailing giants Uber (NYSE: UBER) and Lyft (Nasdaq: LYFT) have settled with Massachusetts Attorney General Andrea Campbell, ushering in a new era of driver benefits and protections.
The deal, announced on Thursday, establishes a minimum pay standard and introduces a suite of benefits for drivers while preserving their status as independent contractors. This development has significant implications for the gig economy and has been reflected in the companies’ stock performances.
Uber and Lyft Settle with Massachusetts, Agree on Minimum Pay
Under the new agreement, Uber and Lyft drivers in Massachusetts will be guaranteed a minimum pay of $32.50 per hour for time spent on trips and en route to pickups.
The deal also includes paid sick leave, accruing one hour for every 30 hours worked, up to 40 hours annually. Drivers working more than 15 hours per week will receive a health insurance stipend, and all drivers will be covered by occupational accident insurance up to $1 million for work-related injuries.Additional benefits include a stipend for the state’s paid family and medical leave program, protection against discrimination and retaliation, and increased transparency on trip details before acceptance. The companies will also provide in-app chat support in multiple languages and implement an appeal process for driver deactivations.
To settle allegations of past wage and hour law violations, Uber and Lyft will pay the state a combined $175 million.
Settlement Resolves Longstanding Lawsuit, Provides Clarity
The settlement resolves a longstanding lawsuit in Massachusetts and avoids the need for a contentious ballot initiative campaign planned for November 2024.
Both companies view this as a major victory, preserving drivers’ independent contractor status while providing enhanced benefits. The agreement creates a framework that balances flexibility with worker protections, potentially serving as a model for similar agreements in other states.Uber and Lyft executives hailed the deal as aligning with their vision of 21st-century work. It allows them to move forward with a new operating model that resolves historical liabilities. Implementing these new benefits will be phased in stages from August 2024 to March 2025, giving the companies time to adjust their operations.
Uber and Lyft Stock Gain
The announcement has had a positive impact on both companies’ stock prices. As of 9:48 AM EDT on the day following the announcement, Lyft’s stock was trading at $13.85, up 3.44% for the day, with a market capitalization of $5.591 billion. Despite this gain, Lyft’s year-to-date return remains negative at -7.55%, though its one-year return shows a significant 40.69% increase.Uber’s stock performance was also strong, trading at $72.32, up 2.81% for the day, with a much larger market capitalization of $151.072 billion.
Uber has outperformed Lyft in both year-to-date and one-year returns, with 17.43% and 64.96% gains respectively.More By This Author:What Volkswagen Group’s $5 Billion Lifeline Means For RIVN Stock
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