Lyft agreed to pay $272.5 million on Thursday, Oct. 1 to settle allegations made by California and local prosecutors that the San Francisco-based ridesharing company misclassified its drivers as independent contractors instead of employees.
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The by California Attorney General Rob Bonta and city attorneys in Los Angeles, San Diego and San Francisco alleged that Lyft misclassified its drivers between 2016 and 2020.
The prosecutors contended that Lyft denied the drivers certain protections afforded to employees such as overtime, the right to minimum wage and reimbursements for work-related expenses.
Lyft Chief Executive David Risher wrote in an Oct. 1 blog post that the settlement — if approved — closes “a chapter from a very different time.”
“Lyft believes drivers have always been properly classified under the law, and we’re glad to put this case behind us,” Risher said. “We remain laser focused on helping create more earnings for drivers and more affordable rides for riders.”
Bonta said in a statement that rideshare companies like Lyft have enjoyed massive growth and profits on the backs of drivers over the past decade, many of whom are from immigrant communities and communities of color.
“Lyft’s success would not be possible without the drivers Lyft sought to unfairly short-change,” Bonta said. “Hard-working employees deserve full compensation for their labor.”
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As part of the settlement, Lyft will pay $272.5 million in restitution and penalties, with roughly $237.1 million going to Lyft drivers. The agreement must first be approved by a judge.
Driver eligibility and compensation will be based on the number of hours and miles driven between April 5, 2016, and Dec. 15, 2020. A third-party settlement administrator was expected to contact eligible drivers at a future time and a website, email address, and call center will be created to field questions from drivers.
Last year, California tightened its rules for determining whether workers could be classified as independent contractors, including through a 2019 law that expanded a legal test for worker classification.
In a related matter, an AG spokesperson said claims against ridesharing rival Uber remain ongoing.
“All options remain on the table, but we are prepared to continue vigorously fighting on beghalf of Uber drivers in court,” said the spokesperson of San Francisco-based Uber.
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