Lyft to Pay $272.5M to Settle California Driver Classification Case

Lyft has reached a $272.5 million settlement to resolve a California lawsuit that accused the company of improperly treating its drivers as independent contractors. The agreement, which still needs a judge’s sign-off, was disclosed in a regulatory filing where the ride-hailing firm said it wanted to sidestep the expense and disruption of drawn-out litigation while keeping management’s attention on its broader goals.

The case traces back to an August 2020 complaint from the California Labor Commissioner’s Office, which argued that drivers should have been classified as employees under state rules in force at the time. That meant, according to the allegations, drivers missed out on minimum wage, overtime, paid sick leave, and prompt payment of wages. California Labor Commissioner Lilia García-Brower credited the drivers who stepped forward, saying their willingness to speak up made the outcome possible, and noted the office will give up its portion of the money so it can go to drivers who filed wage claims.

The settlement applies to alleged violations between April 6, 2016, and December 15, 2020, a stretch when California was fiercely debating the status of gig workers. Voters later approved Proposition 22 in 2020, which carved out an exemption from the 2019 law known as Assembly Bill 5 and kept app-based drivers classified as contractors while extending certain benefits. Lyft said the case belongs to a much earlier era, before Prop 22, and maintained that its drivers have always been properly classified, adding that it went beyond what the measure requires by capping fees.

For Lyft, the deal appears to close out this legal chapter. Uber, which faces a similar suit from the Labor Commissioner’s Office, has not resolved its own case.