Ride-hailing giant Lyft is set to pay a historic $272.5 million settlement to resolve allegations around misclassifying its drivers as independent contractors instead of employees.
San Francisco City Attorney David Chiu said it was “the largest wage and hour settlement in California history.”
“Every worker deserves to be paid fully and fairly,” Chiu wrote in a statement. “Misclassification exploits workers, fuels inequality, and creates an unfair economy.”
The vast majority of the settlement, 87 percent, will go back to drivers. The restitution amount will be set in the future and based on “the number of hours and miles driven between April 5, 2016, through December 15, 2020,” the period covered by the agreement.
That’s a time before voters approved Proposition 22, an Uber- and Lyft-funded ballot measure that classified rideshare drivers as independent contractors, meaning they would not receive the benefits and wage protections afforded to other workers. The gig companies spent more than $200 million on the measure.
Lyft does not acknowledge wrongdoing in the settlement, which was announced Thursday morning by Chiu, California Attorney General Rob Bonta, the city attorneys of Los Angeles and San Diego, and others.
The city attorneys and attorney general brought the lawsuit in 2020, alleging that Lyft deprived workers of minimum wages, overtime and reimbursements for work-related expenses, among other things.
The settlement is still subject to court approval. It does not include any changes to Lyft’s work practices.
In a statement, Lyft maintains that drivers have always been legally classified, and that it is glad that a longtime legal risk has come to an end.
“If approved, this settlement closes a chapter from a very different time, before Prop 22. The vast majority of rideshare drivers in California have always wanted to be independent contractors,” reads the statement. “We’re glad to put this case behind us.”
“Rideshare companies like Lyft have enjoyed massive growth and profits on the backs of drivers over the past decade,” said Bonta. “Lyft’s success would not be possible without the drivers who Lyft sought to unfairly short-change.”
A similar case with Uber, Uber Technologies Wage and Hour Cases, is still winding through the San Francisco Superior Court.
