Lyft has agreed to pay $272.5 million to resolve a lawsuit regarding the classification of its drivers. The legal action, initiated in May 2020 by then-Attorney General Xavier Becerra, alleged that the company failed to comply with state laws by designating drivers as independent contractors rather than employees.
The settlement specifically covers the period from 2016 to 2020. This timeframe was defined by the application of Assembly Bill 5, which established criteria for worker classification. The scope of the agreement is limited to this window because California voters passed Proposition 22 in November 2020, granting ride-hailing firms an exemption from the previous requirements.
While the case against Lyft is now resolved, the legal proceedings against Uber concerning similar allegations remain ongoing. Attorney General Rob Bonta described the settlement as the largest of its kind in California history. Los Angeles City Attorney Hydee Feldstein Soto noted that the agreement aims to address the denial of worker protections during the specified years.
Lyft CEO David Risher stated that the company maintains its belief that drivers were correctly classified. He highlighted that the majority of drivers prefer independent contractor status, a position supported by the 2020 vote on Proposition 22. Risher added that the company has since implemented additional measures, including a fee cap for drivers.
Legal experts and critics have expressed reservations regarding the outcome. Veena Dubal, a professor at the University of California, Irvine, argued that the settlement amount is insufficient compared to the total wages owed to workers. She emphasized that the system failed to provide adequate compensation for thousands of low-income and immigrant drivers.
