Drivers have achieved a lot, but many of the rights of traditional workers are still not guaranteed to them

Under the agreement, drivers will earn at least $32.50 an hour and receive annual raises, health insurance, paid sick leave, medical leave and workers' compensation insurance. Many are eligible for compensation payments, and there is now a formal appeals process for drivers who have quit.

However, they are ineligible for unemployment benefits and traditional workers' compensation insurance. If drivers have legal claims, they must still file individual arbitration claims with the state attorney general's office rather than filing lawsuits in court.

Drivers also have to pay for gas, vehicle maintenance and insurance, and are not paid for the estimated 25 percent of time they spend between passengers, meaning their actual earnings are well under $32.50.

“When you do the math and consider the costs, I doubt they would be getting paid much more than minimum wage, if anything,” says Shannon Liss-Riordan, a labor lawyer who has represented numerous gig drivers and is a founding member of the Massachusetts Is Not for Sale coalition, which advocates for employee status for drivers. “This allows Uber and Lyft to continue to pass the costs of running a business onto their low-wage workers, and this agreement does absolutely nothing to change that.”

Uber and Lyft did not respond to questions about concerns about the agreement.

Some employee representatives are disappointed that drivers will continue to be independent contractors

Because of the control the companies have over drivers' job assignments, wages and clients, gig drivers should be classified as employees under Massachusetts state law, labor lawyers say. That's why the attorney general took the companies to court in the first place. And the trial was the state's best chance to prove it.

Without a court ruling that drivers are employees, it will be more difficult for other states to determine this, labor advocates point out, and independent contractor business models will continue to proliferate.

“They're creating a separate system of government regulation for two companies,” said David Weil, a labor economist at Brandeis University and former head of the wage and hour division in President Obama's Labor Department who served as the lead federal expert in the case. “And that's exactly what they've done across the country. They're creating different rules that they have to live by. … Because if you can get away with that and not have to make people your employees, who can resist that?”

Liss-Riordan said she was concerned about the many unanswered questions that still remain.

“The Attorney General was the only authority that could obtain a ruling in court that they were breaking the law, and the Attorney General missed that opportunity,” she said. “There is a lot of room for [Uber and Lyft] cause a lot of mischief.”

Uber and Lyft are still saving a lot of money

Because the drivers are still not employees, the companies don't have to pay payroll taxes. According to a recent state comptroller's office report, if Uber and Lyft drivers had been classified as employees, their earnings would have resulted in estimated payments of more than $266 million into state unemployment insurance, workers' compensation and paid family and medical leave funds between 2013 and 2023.

Campbell's office said the $32.50 minimum wage for drivers is intended to make up for the lack of payroll taxes paid into government programs for workers.

Drivers remain responsible for their own income taxes.

Consumers are concerned about rising fares

Other cities have increased wages for gig workers with mixed results.

Seattle set a minimum wage for delivery app drivers earlier this year, but later considered changing the measure after it drove up prices for consumers and hurt participating restaurants.

After New York City drivers' wages were raised in 2019, fares did indeed rise. But they also rose in Chicago, where drivers' wages were not increased, according to a study by James A. Parrott, director of economic and tax policy at the New School's Center for New York City Affairs.

“It is difficult to imagine that there would be a price effect due to [the Massachusetts deal] unless companies take this as an opportunity to say, “Because we are paying better now than before, we are raising fares,” Parrott said.

And driver wages probably won't increase that much. Driver Charles Clemons said he already earns an average of $25 to $35 an hour transporting passengers in his minivan. If there is a fare increase, Clemons said, passengers will likely be willing to accept the increase.

“When it rains, they already charge customers a little more,” Clemons said. “It's still cheaper than a taxi and there's availability.”

Nevertheless, consumers are concerned.

Bram Shapiro of Brookline takes Uber or Lyft to the airport or home after a night of drinking because it's cheaper than a taxi. But he wonders if that will stay that way. “It seems to consumers that it's inevitable that they'll take the hit,” he says.

Many drivers are enthusiastic

The agreement is a great victory for drivers. Many of them rely on the flexibility that ride-sharing platforms offer them to earn money at any time – a luxury that the companies wanted to eliminate if the drivers became employees.

However, it is doubtful whether the companies would forego this flexibility, as it is an essential part of their business model, says Weil: “Flexibility is indispensable for them. … It is not a gift to the drivers. It is part of their profit model.”

Awet Teame, a driver from Brookline, said she balances her full-time job as a Lyft driver with her artistic pursuits as an actress and comedian. Before joining the platform, it was difficult to take production jobs or take classes while working a second job with strict hours. Now, she makes between $1,000 and $1,500 a week in her free time.

Expanding employment to Lyft employees would have “felt like making them taxi drivers,” Teame said. “Who doesn't like being their own boss? This is just a huge relief.”

But some drivers are worried

In New York City, a similar pay policy resulted in Uber denying drivers access to its app during times of low demand, reducing some drivers' revenue by as much as 50 percent.

Leonel De Andrade, a driver from Brockton, said the settlement was proof that the corporations “stole something from us.” But becoming an employee would have been even better — with more stability and protection in the long run.

“We need a guarantee that this situation – this protection – will continue for us,” he said.

You can reach Katie Johnston at [email protected]. Follow her @ktkjohnstonDiti Kohli can be reached at [email protected]. Follow her @ditikohli_.