Ride-sharing company Lyft settlement has been finalized at $272.5 million to resolve a California lawsuit alleging that the company misclassified drivers as independent contractors and failed to provide proper wages and labor benefits. This marks the largest settlement in California history for wage and hour litigation.
The lawsuit originated from allegations that from 2016 to 2020, Lyft classified drivers as independent contractors rather than employees, failing to provide worker protections mandated by state law at the time.
The California Labor Commissioner’s Office filed the lawsuit in 2020, claiming that Lyft failed to properly provide drivers with minimum wage, overtime pay, rest break premiums, expense reimbursement, and paid sick leave.
Eighty-seven percent of the settlement funds will be paid directly to drivers, which amounts to approximately $237 million in simple calculations.
While maintaining its previous position that drivers were properly classified under the law at the time, Lyft stated that “this settlement puts past issues to rest.”
This case covers the period prior to California voters passing Proposition 22 in 2020, which recognized ride-sharing drivers as independent contractors under certain conditions. Therefore, this settlement does not change the current legal status of Lyft drivers as employees.
The settlement comes amid expanding labor rights for California ride-share drivers. Under AB 1340, passed last year, ride-share drivers were granted the right to unionize and engage in collective bargaining, and in September of this year, the California Public Employment Relations Board officially recognized the related union.
California labor authorities explained that this settlement is a measure to resolve wage claims raised by drivers and secure the effectiveness of worker protection regulations.
