Uber and Lyft are now required to pay Massachusetts drivers $32 an hour

Rideshare drivers in Massachusetts will soon get company-provided benefits, as well as a minimum pay of $32.50 per hour, starting on August 15th. That’s thanks to a new settlement between the state and rideshare companies Uber and Lyft, four years after Attorney General Andrea Campbell sued the companies, asserting their drivers ought to be considered employees under state law.

The two companies also agreed to pay a combined $175 million, the bulk of which will be paid out to “current and former drivers who were underpaid by the companies,” Campbell’s office announced yesterday. The office says it will release details about who qualifies and how to apply “in coming weeks.” Despite the settlement and the original thrust of the suit, drivers will still be considered independent contractors.

Still, drivers in the state will get yearly inflation-based pay raises and other employee-style benefits, such as being able to earn up to 40 hours of sick leave a year, paid at $20 per hour. Uber and Lyft will also give drivers stipends so they can buy healthcare and sign up for the state’s family and medical leave program, and will cover work-related injuries.

To ensure they’re complying with the agreement, the companies have to carry out annual audits and submit reports to the Attorney General’s office. Punishment for violations could include “any applicable restitution, fines, and penalties,” according to the published settlement.

The rideshare companies have mostly avoided being regulated this way in California after successfully persuading voters there to pass a 2020 law that exempted businesses from being required to treat gig workers as employees; that’s been winding its way through state courts. The Massachusetts settlement accounts for that, requiring them to stop supporting a similar ballot initiative campaign. DoorDash and Instacart have also said they’re backing off, according to local reporting by WBUR.