Lyft to pay $272.5M to settle lawsuit over driver classification
Lyft has agreed to pay $272.5 million to settle a lawsuit that accused the ride-hailing company of misclassifying drivers as independent contractors, violating California law.
Ride-hailing company Lyft has agreed to pay $272.5 million to settle a lawsuit alleging the company violated California law by classifying drivers as independent contractors rather than employees. The settlement, which still requires judicial approval, resolves claims dating from April 2016 to December 2020.
In a regulatory filing, Lyft stated that the settlement will help the company avoid the "costs and distraction of protracted litigation" and allow management to focus on business objectives. The company did not immediately respond to requests for comment.
The lawsuit was filed by the California Labor Commissioner’s Office in August 2020. It alleged that drivers were denied minimum wage, overtime pay, and other employee benefits and protections, such as paid sick leave and timely wage payments.
California Labor Commissioner Lilia García-Brower stated that the Labor Commissioner's Office will forgo its share of the settlement funds and direct them to drivers who filed wage claims. She emphasized that the outcome was possible because "workers came forward and spoke up."
The settlement period covers a time when California was actively debating the employment status of gig economy workers. This case is one of several legal challenges ride-sharing companies have faced regarding driver classification.