Uber & Lyft will pay millions to drivers in New York to settle wage dispute

Lyft has promised its drivers will receive at least 70% of the money their clients pay to ride with them, part of the rideshare company's efforts to boost pay transparency amid long-running criticisms about its driver compensation. 

The rideshare company is pledging to pay its lower-earning drivers the difference between their take-home pay (after insurance and taxes) and 70% of their clients' fares each week, Lyft said Tuesday in a statement. 

Lyft and other gig-economy companies have faced years of battles over their compensation practices and their treatment of workers, who are generally considered contractors. According to the Washington Center for Equitable Growth, independent contractors typically don't qualify for employer-provided dental and health insurance and are paid less than full-time employees. 

Rideshare drivers have also complained about low pay and unsafe work conditions, among other issues. 

On Tuesday, Lyft said its drivers on average earn about 88% of rider payments, after taxes and other fees. But it noted that about 15 in 100 drivers earned less than 70% of their riders' payments, after fees, on a weekly basis last year.

Under Lyft's new benefit package, riders will be able to access a breakdown of how they are paid out for their completed rides, in addition to being able to earn extra money for accepting scheduled pick-ups. The company will also offer an extra $100 for drivers who complete 50 rides with an electric vehicle within a week between February 12 and July 1. 

"We've heard lots of feedback around consistent themes — earnings, deactivations and safety — and we're taking action to address them," Lyft CEO David Risher said in a statement to CBS MoneyWatch. 

Lyft and Uber drivers have long fought to gain recognition as full-time workers, despite several courts siding against their efforts. Last month, however, the Biden administration passed a new rule narrowing the criteria for classifying workers as independent contractors, which could boost labor organizers' fight to secure more benefits for rideshare drivers. 

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• Lyft
• Uber

Elizabeth Napolitano

Elizabeth Napolitano is a freelance reporter at CBS MoneyWatch, where she covers business and technology news. She also writes for CoinDesk. Before joining CBS, she interned at NBC News' BizTech Unit and worked on The Associated Press' web scraping team.