Lyft agrees to pay $272.5 million in California driver case — TechCrunch

Lyft has agreed to pay $272.5 million to settle a lawsuit in California accusing the company of improperly classifying drivers as independent contractors rather than employees. As TechCrunch reports, the agreement still requires a judge’s approval.

Lawsuit over drivers’ status

The California Labor Commissioner’s Office filed the lawsuit in August 2020. The agency argued that Lyft should have classified drivers as employees under state law in effect at the time.

According to the plaintiffs, because they were classified as contractors, drivers did not receive minimum wage, overtime pay, and other labor protections, including paid sick leave and timely payment of wages. The agreement covers alleged violations from April 6, 2016, to December 15, 2020.

In a regulatory filing, Lyft said the settlement would allow it to avoid the costs and distraction of prolonged litigation and focus on meeting its business objectives.

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Funds for drivers and rule changes

California Labor Commissioner Lilia García-Brower said the outcome was made possible by drivers who reported violations. According to her, the agency will waive its share of the payment and direct those funds to drivers who filed wage claims.

Drivers for services such as Lyft and Uber in California are currently classified as contractors after voters approved Proposition 22 in 2020. The measure created an exemption from Assembly Bill 5, passed in 2019, which required companies such as Lyft, Uber, and DoorDash to classify gig-economy workers as employees.

Related cases have been coordinated in San Francisco Superior Court since September 2021. Uber continues to face a similar lawsuit from the California Labor Commissioner’s Office.