By Joseph Ax and Jonathan Stempel
NEW YORK (Reuters) - Ride-sharing company Lyft Inc will pay $300,000 to New York authorities to resolve claims that its entry into the Buffalo and Rochester markets was illegal, state Attorney General Eric Schneiderman said on Thursday.
The agreement comes a year after Schneiderman’s office and the state’s insurance regulator filed a lawsuit seeking to stop the company from operating in Buffalo and Rochester and to block it from starting a New York City service.
Lyft allows its users to “hail” a ride within minutes by using an application on their smartphones. Drivers who have gone through Lyft’s background checks respond to the requests and receive their fares from the customers' stored credit card accounts.
In July, Lyft and the two state agencies reached an agreement allowing it to start service in New York City with drivers commercially licensed under the city’s Taxi and Limousine Commission. The operations in Buffalo and Rochester were suspended in August, however.
"Today's mutually agreed upon settlement does not require any changes to existing Lyft service in New York," the company said in a statement. "The settlement is part of our continued efforts to return true, peer to peer ride sharing to New York State at large, an effort supported by leaders and consumers across the state."
Lyft did not admit wrongdoing as part of the deal.
In a statement, Schneiderman said: “Today’s agreement enables Lyft to grow and prosper within the bounds of state and local regulations, while the penalties imposed send the message that companies that attempt to skirt the law will be held accountable.”
San Francisco-based Lyft recently received a $100 million investment from activist investor Carl Icahn, following $530 million in a funding round in March.
A California labor commission ruled this month that a driver for Lyft rival Uber was an employee, not a contractor, a decision that could eventually raise costs for smartphone-based ride hailing companies. The ruling came to light on Tuesday after Uber filed an appeal in San Francisco.
(Reporting by Joseph Ax; Editing by Lisa Von Ahn and Andrew Hay)