Lyft Agrees To Pay $272.5 Million To Settle Employee Classification Lawsuit
Uber and Lyft had been sued by the state of California in 2020 for misclassifying workers as contractors.
Lyft pays $272.5 million to settle a May 2020 lawsuit that alleged each it and Uber had been misclassifying workers as contractors, California Attorney General Rob Bonta announced in a statement on Thursday. The lawsuit was filed following the passage of Assembly Bill 5, which categorized gig staff as workers, however earlier than the reclassification launched by the passage of Prop 22.
If the settlement is permitted by the courtroom, Lyft pays $272.5 million in penalties, with at the least $237,075,000 of that whole reserved for paying again staff for the minimal wage and advantages they’re owed. “Driver eligibility and compensation can be based mostly on the variety of hours and miles pushed between April 5, 2016, by December 15, 2020,” the assertion says.
The passage of Assembly Bill 5 in 2019 codified what’s known as the “ABC test” into regulation, standards companies have to make use of to show their staff are unbiased contractors slightly than workers. The unique language of the invoice allowed Lyft and Uber drivers to be classified as employees who had been owed a minimal wage and different protections. Because the classification threatened the trade mannequin of gig work platforms like Lyft and Uber, each corporations backed Prop 22 in November 2020. The poll measure created carve-outs from the ABC take a look at that reclassified gig staff as contractors, whereas guaranteeing them sure advantages like healthcare subsidies.
Workers have challenged the legality of Prop 22, however the regulation has been upheld by the California Supreme Court as not too long ago as 2024. While Lyft’s settlement resolves the state’s claims in opposition to the corporate and is a significant win for gig staff, Uber’s portion of the lawsuit stays unresolved.
