Lyft to pay $272.5 million in California wage settlement

Lyft has agreed to a $272.5 million settlement with California state and city authorities to resolve allegations of misclassifying drivers as independent contractors between 2016 and 2020. The agreement, if approved by a judge, would be the largest wage and hour settlement in California's history.

The settlement addresses claims that drivers were denied wages and benefits they would have been owed as employees. However, the agreement focuses on past practices and does not alter the current classification of drivers, a point of contention that led Lyft and other gig companies to fund Proposition 22 in 2020.

Proposition 22, approved by voters, allows gig companies to continue classifying drivers as independent contractors. Lyft maintains drivers have always been classified correctly and stated the settlement closes a chapter from "a very different time, before Prop 22."

Driver advocates call the settlement a victory but note it compensates for past issues without changing current working conditions. Nicole Moore, president of Rideshare Drivers United, stated that drivers are still owed significantly more for the period in question. She estimated Lyft owes drivers around $20 billion for those four years.

Despite this settlement, drivers continue to fight for their rights. A separate lawsuit has been filed against Uber, alleging breaches of promises made in Proposition 22. The success of this suit could invalidate the proposition and reinstate stricter labor laws, potentially opening the door for claims from 2020 onward.