Ride-hail giants Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) are set to pay a $328 million settlement following a New York State Attorney General's investigation into wage malpractices from 2014 to 2017. The settlement, the largest wage-theft resolution ever secured by the office, requires both companies to compensate over 100,000 drivers who had been unlawfully denied wages.
The probe revealed that Uber had incorrectly deducted sales tax and Black Car Fund fees from driver payments, while Lyft had imposed an 11.4% "administrative charges" on drivers' earnings - costs which should have been borne by passengers. As part of the settlement, Uber and Lyft will pay $290 million and $38 million respectively into separate funds for back-paid funds to current and former drivers.
The agreement also necessitates several improvements in driver conditions. Both companies are mandated to implement a minimum earnings floor, ensuring a minimum rate from dispatch to completion of the ride. They are also required to provide paid sick leave, distribute proper hiring and earnings notices, and improve overall working conditions across the state.
Over 100,000 New York drivers, predominantly from immigrant communities, are expected to benefit from these changes. High-ranking officials from both companies hailed the settlements as a victory for drivers.
In related news, Uber has raised the driver minimum age in California due to insurance costs.
InvestingPro Insights
In light of the recent developments, it's important to consider some key insights from InvestingPro. For Uber, despite the significant settlement payment, it's notable that the company has seen a significant return over the last week and year, as per InvestingPro Tips. Furthermore, analysts predict the company will be profitable this year, which is a positive sign for investors.
On the other hand, Lyft holds more cash than debt on its balance sheet, which could provide some financial cushion following the settlement. However, the company's stock price movements are quite volatile, which could be a concern for some investors.
Looking at InvestingPro Data, Uber has a market cap of 97.58B USD and a revenue growth of 37.0% as of Q2 2023. Lyft, on the other hand, has a smaller market cap of 4120M USD, but its revenue growth stands at 14.85% for the same period.
These insights, among many others, are available in more detail on InvestingPro's platform, which offers comprehensive financial data and tips for numerous companies.
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