Ride-hailing giants Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) have agreed to pay a combined sum of $328 million to settle wage theft allegations in New York, according to an announcement by Attorney General Letitia James on Thursday. The companies were accused of improperly charging drivers for sales taxes and other charges that were supposed to be customer liabilities.
Uber will bear the lion's share of the settlement, contributing $290 million, while Lyft will pay $38 million. The funds are set to be disbursed among current and former drivers.
In addition to the monetary settlement, both companies have committed to provide paid sick leave and a minimum wage of $26 per hour for drivers operating outside New York City. The move comes after years of accusations from James that both firms systematically underpaid their drivers.
Uber's chief legal officer, Tony West, expressed that this agreement conclusively resolves the classification issue in New York. Similarly, Lyft's chief policy officer, Jeremy Bird, also hailed the settlement as a significant win for their drivers.
The wage theft allegations are part of a larger issue regarding the status of gig economy workers. While this settlement marks a victory for drivers in New York, it remains to be seen how it will impact similar cases in other jurisdictions.
InvestingPro Insights
InvestingPro Tips and real-time data shed light on the financial health and market performance of both Uber and Lyft. According to InvestingPro, Uber is predicted to see a growth in net income this year and has shown a significant return over the last week. Despite operating with a moderate level of debt, the company has been a prominent player in the Ground Transportation industry and has yielded high returns over the past year.
On the other hand, Lyft holds more cash than debt on its balance sheet, and like Uber, is also expected to see net income growth this year. However, the company's stock price movements have been quite volatile, and its short term obligations exceed its liquid assets.
InvestingPro data reveals that Uber's market cap stands at a hefty 95.27B USD while Lyft's is comparatively smaller at 3840M USD. Uber's revenue for the last twelve months as of Q2 2023 is 35.0B USD, showing a growth of 37.0%. Lyft, on the other hand, has a revenue of 4250.27M USD with a growth of 14.85% for the same period.
For those interested in a deeper dive into these companies' financials or other investment opportunities, InvestingPro offers a wealth of additional tips and data.
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