Lyft to pay $272.5 million to settle California driver misclassification lawsuit

Lyft has agreed to a $272.5 million settlement to resolve allegations that it misclassified drivers as independent contractors rather than employees in California. The settlement, which is subject to court approval, addresses claims spanning from April 2016 to December 2020.

California Attorney General Rob Bonta and attorneys from San Francisco, San Diego, and Los Angeles led the legal action. Prosecutors alleged that the misclassification denied drivers essential protections, including minimum wage, overtime pay, sick leave, and reimbursement for work-related expenses. Of the total settlement, at least $237 million is designated to compensate eligible drivers based on their hours and miles driven during the period in question.

Lyft stated that the agreement allows the company to avoid the costs and distractions of prolonged litigation. The company noted that the dispute pertains to a different era prior to the passage of Proposition 22, a 2020 ballot measure that allowed gig-economy companies to continue classifying drivers as independent contractors while providing certain benefits.

While the settlement resolves claims against Lyft, officials noted that legal efforts regarding driver classification continue for other companies, such as Uber, which holds a larger share of the rideshare market.