Lyft Agrees to $272.5 Million Settlement for Misclassification of Drivers in Lawsuit
Lyft has reached a settlement of $272.5 million to resolve a lawsuit that claimed the ride-sharing firm improperly classified its drivers as independent contractors instead of employees, in violation of California law.
In a recent regulatory disclosure, Lyft expressed its belief that this settlement will help avoid the lengthy and costly process of extended litigation, thereby allowing management to concentrate on achieving its business goals.
Lyft was not available for comments regarding the settlement.
This legal matter originated from a lawsuit initiated by the California Labor Commissioner’s Office in August 2020. The suit accused Lyft of failing to classify drivers as employees, as mandated by state law during that period.
The allegations included claims that drivers were deprived of minimum wage and overtime pay, along with other employee benefits such as paid sick leave and prompt wage disbursements.
California Labor Commissioner Lilia García-Brower highlighted that this settlement was possible thanks to the voices of the workers who came forward. She also noted that the Labor Commissioner’s Office would relinquish its share of the settlement funds, redirecting them to the drivers who submitted wage claims.
This settlement, pending judicial approval, addresses claims of violations between April 6, 2016, and December 15, 2020—a time when California was navigating the classification of gig economy workers as either independent contractors or employees.
Currently, drivers for app-based services like Lyft and Uber are classified as contractors following the approval of Proposition 22 in 2020. This measure created an exception to Assembly Bill 5, which was enacted in 2019 and required companies like DoorDash, Lyft, and Uber to designate gig workers as employees, thereby granting them minimum wage, workers’ compensation, and additional benefits.
Despite the implementation of AB 5, Lyft, Uber, and similar companies continued to classify their drivers as contractors. This led to legal actions by the Labor Commissioner’s Office, the California Attorney General, as well as city attorneys from Los Angeles, San Diego, and San Francisco, along with private lawsuits filed under California’s Private Attorneys General Act, which were consolidated in San Francisco Superior Court in September 2021.
This settlement effectively concludes this particular legal issue for Lyft, while Uber continues to face a lawsuit from the Labor Commissioner’s Office with similar claims.
