In a groundbreaking settlement reached between rideshare companies Uber and Lyft and the state of Massachusetts, rideshare drivers in the state will now be entitled to company-provided benefits and a minimum pay of $32.50 per hour starting from August 15th. The settlement comes four years after Attorney General Andrea Campbell sued the companies, arguing that their drivers should be recognized as employees under state law.

As part of the settlement, Uber and Lyft will pay a combined $175 million, with the majority of the funds going towards compensating "current and former drivers who were underpaid" by the companies, according to an announcement by Attorney General Campbell's office. Detailed information on eligibility and the application process will be released by the office in the coming weeks.

However, it is important to note that despite the settlement, rideshare drivers will still be classified as independent contractors. Nonetheless, drivers in Massachusetts will now enjoy additional benefits comparable to those provided to employees. These include yearly pay raises adjusted for inflation and the ability to earn up to 40 hours of sick leave per year, paid at a rate of $20 per hour. Furthermore, Uber and Lyft will offer stipends to drivers for healthcare expenses and assistance in enrolling in the state's family and medical leave program. The companies will also provide coverage for work-related injuries sustained by drivers.

To ensure compliance with the agreement, Uber and Lyft will be subject to annual audits and must submit reports to the Attorney General's office. Violations of the settlement terms may result in restitution, fines, and penalties as deemed appropriate by the authorities.

The settlement in Massachusetts stands in contrast to California, where the rideshare companies have managed to avoid similar regulations after successfully convincing voters to pass a law in 2020 that exempted gig workers from being classified as employees. This matter is still under review in California's state courts. Notably, the Massachusetts settlement also requires Uber and Lyft to halt their support for a ballot initiative campaign seeking a similar exemption. Additionally, DoorDash and Instacart have stated that they will also withdraw their support for a similar campaign, according to local reporting by WBUR.

The landmark settlement in Massachusetts signals a significant step towards enhanced benefits and fair compensation for rideshare drivers in the state. While they will continue to be classified as independent contractors, the agreement ensures important improvements to their working conditions and underscores a commitment to protecting worker rights in the evolving gig economy.