Uber, Lyft Driver Pay Proposals in 2024 Shaped by New York Deal

Recent Uber Technologies Inc. and Lyft Inc. settlements with New York’s attorney general and labor department are shaping expectations as state and local policymakers continue to debate the issues of driver pay, benefits, and employment status heading into 2024.

The rideshare industry is holding up the New York deal as a model for other states and cities, as legislative and ballot proposals get teed up for action in Chicago, Colorado, Massachusetts, and Minnesota. Announced Nov. 2, the settlements let the industry continue classifying drivers as independent contractors by not specifically addressing worker classification, but at the same time extending specific pay, benefits, and protections.

But a coalition of driver groups has criticized the New York settlement’s $26 minimum hourly pay as a raw deal for drivers that doesn’t compensate them for time waiting between passenger pickups or account for their vehicle expenses.

“Given that the New York deal is tied to a big cash settlement, that probably makes it look a little more driver friendly,” said Kerry Harwin, spokesman at the Drivers Union of Washington. But that “creates an inaccurate perception that it’s a win for drivers,” as Uber pushes for a similar settlement or legislative deal in Massachusetts, he said.

The state and local proposals brewing for 2024 form the latest front in the wide-ranging legal battle over the treatment of gig economy workers, particularly rideshare and delivery drivers. Major gig companies such as DoorDash Inc., GrubHub Inc., Lyft, and Uber classify them as independent contractors rather than employees, which excludes them from a long list of benefits and legal protections such as minimum wage, the right to unionize, unemployment insurance, and paid sick leave.

That independent status is key to the companies’ business model and serves as a starting point for talks on legislative deals, even before the dollar amount of minimum guaranteed pay.

“The focus is on pitching proposals to state legislators that add benefits while protecting flexibility as the NY deals did,” Uber representative Josh Gold said in an email.

Massachusetts Competing Proposals

The companies argue and often point to surveys indicating that drivers want the schedule flexibility and ability to drive for multiple companies that come with being independent.

“Nearly all of them drive because of the independent contractor status, not in spite of it,” Brendan Joyce, a public policy manager for Lyft, told Massachusetts lawmakers at a November hearing on rideshare driver legislation.

The industry is pushing a variety of state legislative and ballot proposals in Massachusetts that would ensure drivers aren’t classified as employees, while guaranteeing them minimum pay rates and benefits.

Labor unions have proposed competing legislation and ballot measures in the state. Some would declare drivers to be employees, and others would set up a state-supervised collective bargaining process that would let drivers negotiate their pay and benefits with companies despite not being covered by federal labor law.

“The right to collectively bargain over wages and working conditions is a core value not only for the commonwealth but also the United States,” state Sen. Liz Miranda (D) said at the November public hearing.

While much of the legislative action focuses on rideshare drivers, a few proposals have cropped up that include food delivery drivers as well.

Most notably, New York City’s law setting a minimum hourly pay of $17.96 for food delivery drivers was allowed to take effect Dec. 4 after surviving a legal challenge.

The minimum pay laws can have pros and cons for drivers, as New York delivery drivers have complained the companies are discouraging tipping and made changes to the apps that could reduce drivers’ hours and overall earnings.

Pay Rates, Details Vary

The New York settlements were the first of their kind—legal agreements setting statewide guarantees for drivers—just as Washington state’s 2022 law was the first statewide legislative measure mandating minimum rideshare driver pay and benefits.

State legislative efforts in Colorado, Massachusetts, and Minnesota could end up emulating both New York and Washington, but with some key exceptions.

The Washington legislation affirmed that drivers won’t be classified as employees, a negotiated compromise among the industry, lawmakers, and the local Drivers Union. The law does set guaranteed minimum pay for drivers and extends benefits including unemployment insurance and paid family and medical leave.

But Minnesota lawmakers aren’t likely to agree to similar language locking in drivers’ non-employee status, said state Rep. Jamie Long (DFL), speaking to the governor’s rideshare drivers task force at its final meeting Dec. 19.

Gov. Tim Walz (DFL) appointed the task force to make recommendations for 2024 legislation regulating the pay and working conditions of rideshare drivers after he vetoed the bill lawmakers passed in 2023. Uber and Lyft had complained the pay rates in the 2023 measure were excessive and threatened to scale back or halt their services in the state if it became law.

A Minneapolis bill to raise driver pay also met a veto from the city’s mayor in August.

The task force is due to submit its recommendations to the governor by Jan. 1.

Harwin, whose group was involved in negotiating the Washington legislation, said the devil is in the details, particularly the pay rates and how they’re calculated.

Under the Washington law, rideshare companies are required to pay $1.27 per mile plus $0.37 per minute for distance and time spent transporting passengers, with the minimums guaranteed on a per-trip basis. The pay guarantees in the New York deal instead are calculated based on a biweekly pay period, not per trip, Harwin said.

Some local ordinances have imposed higher pay rates, at $1.314 per mile plus $0.564 per minute in New York City and $1.50 per mile plus $0.64 per minute in Seattle.

A proposed ordinance in Chicago would guarantee drivers at least $1.85 per mile plus $0.65 per minute, as well as require Uber and Lyft to pay at least 80% of the fare from each ride to the drivers. Similar to the vetoed Minnesota legislation, the Chicago ordinance attempts to side-step the classification issue by stating that it doesn’t determine whether drivers are employees or independent contractors.

The Minnesota task force wasn’t able to agree on minimum pay rates to recommend to the legislature at its final meeting, partly because the industry and driver representatives at the table couldn’t agree on the worker classification issue.

“It’s too difficult to have a per-minute, per-mile conversation without having clarity on the classification status,” Gold told the Minnesota task force.