Lyft to pay $272.5M to settle California driver classification suit
Lyft agreed to pay $272.5 million to settle a California lawsuit over classifying drivers as independent contractors. The deal needs judicial approval.
Lyft has agreed to pay $272.5 million to settle a lawsuit accusing the company of misclassifying drivers as independent contractors instead of employees under California law. The settlement, disclosed in a regulatory filing, still requires approval from a judge.
In the filing, Lyft said the agreement allows it to avoid the costs and distraction of protracted litigation and to keep management focused on business objectives. The settlement covers alleged violations from April 6, 2016 to December 15, 2020.
California Labor Commissioner Lilia García-Brower said the Labor Commissioner's Office will forgo its share of the settlement and direct those funds to drivers who filed wage claims.
Background
In August 2020, the California Labor Commissioner's Office sued Lyft, alleging the company treated drivers as contractors rather than employees as required under state law at the time. The lawsuit claimed drivers were denied minimum wage, overtime, paid sick leave, timely wage payments and other employee benefits and protections.
The legal fight unfolded alongside shifting state rules. In 2019, California passed Assembly Bill 5, requiring companies such as DoorDash, Lyft and Uber to classify gig workers as employees entitled to minimum wage, workers' compensation and other benefits. After AB 5 took effect, Lyft, Uber and other gig-worker companies continued to classify drivers as contractors, prompting action from the Labor Commissioner's Office, the California Attorney General, the city attorneys of Los Angeles, San Diego and San Francisco, and private suits under California's Private Attorneys General Act.
In 2020, California voters passed Proposition 22, which classified drivers for app-based transportation services like Lyft and Uber as contractors and created a carve-out from AB 5. In September 2021, the cases were coordinated in San Francisco Superior Court. Uber still faces a Labor Commissioner's Office lawsuit making similar allegations, according to techcrunch.com.
Quick answers
How much will Lyft pay to settle the California lawsuit?
Lyft agreed to pay $272.5 million to settle the lawsuit over classifying drivers as independent contractors.
Does the settlement need approval?
Yes. The settlement must still be approved by a judge.
What period does the settlement cover?
It covers alleged violations from April 6, 2016 to December 15, 2020.