Uber Technologies (NYSE:UBER) and Lyft (NASDAQ:LYFT) have reached an agreement to settle a longstanding lawsuit in Massachusetts by providing significant worker benefits and a combined payment of $175 million.
This settlement resolves the dispute over the classification of drivers as independent contractors, which had previously been slated for a November ballot initiative.
Massachusetts Attorney General Andrea Campbell announced on Thursday that the substantial financial settlement will address violations of state wage and hour laws.
A majority of the $175 million will be allocated as back pay to both current and former drivers who were not compensated adequately by the companies.
As part of the agreement, Uber and Lyft will establish a minimum wage standard of $32.50 per hour for active driving time.
Additionally, the companies have committed to offering paid sick leave and a cash stipend for health insurance, among other new benefits.
This resolution not only compensates drivers for past grievances but also promises improved working conditions moving forward.