Lyft has reached a settlement agreement to pay $272.5 million to resolve a lawsuit regarding the classification of its drivers. The legal action, initiated by the California Labor Commissioner’s Office in August 2020, alleged that the company incorrectly labeled drivers as independent contractors instead of employees.
The lawsuit claimed that this classification denied drivers access to benefits such as minimum wage, overtime pay, and paid sick leave. The settlement covers alleged violations occurring between April 6, 2016, and December 15, 2020. The funds are designated for drivers who filed wage claims, as the Labor Commissioner’s Office will forgo its portion of the settlement.
The agreement is currently awaiting judicial approval. The company stated that the settlement aims to avoid the expenses and operational distractions associated with ongoing litigation. This legal dispute arose during a period of regulatory uncertainty in California regarding the status of gig economy workers, which was later addressed by the passage of Proposition 22.
While this settlement concludes the case for Lyft, similar legal challenges regarding driver classification remain pending against other ride-hailing companies, including Uber. The legal proceedings were previously coordinated in the San Francisco Superior Court starting in September 2021.
