Lyft is paying $272.5M to settle lawsuit over the way it labeled drivers

Lyft has agreed to pay $272.5 million to settle a lawsuit accusing the ride-hailing firm of violating California regulation by misclassifying drivers as impartial contractors, as an alternative of workers.

The firm stated in a regulatory filing that it believes the settlement will enable it to keep away from the “prices and distraction of protracted litigation and allow administration to keep up its deal with executing its corporate affairs goals.”

Lyft couldn’t be reached for remark.

The settlement stems from a lawsuit filed by the California Labor Commissioner’s Office in August 2020 that accused Lyft of treating drivers as impartial contractors fairly than as workers, as required underneath state regulation on the time.

The lawsuit alleged that drivers had been denied minimal wage and time beyond regulation in addition to different advantages and protections offered to workers, together with paid sick go away and well timed wage funds.

“This settlement is concerning the staff who got here ahead and spoke up. Their voices made this final result attainable,” California Labor Commissioner Lilia García-Brower said in a statement, including that the LCO will forgo its share of the settlement and direct these funds to drivers who filed wage claims.

The settlement, which nonetheless should be permitted by a choose, covers alleged violations from April 6, 2016 to December 15, 2020 — a interval California was grappling with whether or not staff within the booming gig financial system had been impartial contractors or an workers.

Today, drivers for app-based transportation companies like Lyft and Uber are labeled as contractors after voters passed ballot measure Proposition 22 in 2020. The poll measure offered a carve-out from Assembly Bill 5, a state regulation handed in 2019 that required corporations like DoorDash, Lyft, and Uber to categorise gig staff as workers, entitling them to minimal wage, staff’ compensation, and different advantages. 

Even after AB 5 took impact, Lyft, Uber, and different corporations that relied on gig staff continued to categorise their drivers as contractors. That finally led to authorized motion from the LCO, California Attorney General and the City Attorneys of Los Angeles, San Diego and San Francisco, in addition to personal actions filed underneath California’s Private Attorneys General Act. The circumstances had been coordinated in San Francisco Superior Court in September 2021.

The settlement closes this authorized chapter, at the very least for Lyft. Uber nonetheless faces an LCO lawsuit that makes comparable allegations.