Lyft has agreed to a $272.5 million California driver settlement over allegations that it treated drivers as independent contractors when they should have been employees. California Attorney General Rob Bonta announced the proposed deal Oct. 1 with city attorneys from San Francisco, San Diego and Los Angeles, the state Labor Commissioner’s Office and private plaintiffs. It still needs court approval.
California officials alleged Lyft’s classifications from 2016 through 2020 denied drivers protections including minimum wage, overtime and reimbursement for work expenses. The agreement resolves those claims against Lyft, not every dispute over app-based work or driver classification.
State officials said Lyft must pay $272.5 million in restitution and penalties. At least $237.075 million, or 87% of the total, is reserved for drivers.
Which Lyft drivers could receive settlement money?
Eligibility and payment amounts will be based on the hours and miles a driver logged between April 5, 2016, and December 15, 2020, according to the attorney general’s office. The announcement does not say that payments have begun or provide individual award amounts.
If the court approves the deal and Lyft starts funding it, a third-party administrator is expected to contact eligible workers. That administrator will also set up a website, email address and call center for drivers seeking information about restitution.
Bonta called the deal California’s largest misclassification settlement. San Francisco City Attorney David Chiu separately described it as the state’s largest wage-and-hour settlement. Those are officials’ characterizations of the agreement, which remains proposed pending court action.
Why does the settlement stop in 2020?
The case concerns work performed before Proposition 22 changed how California’s ABC test applies to some app-based drivers. The ABC test is the state’s framework for evaluating whether a worker is properly treated as an independent contractor; the California Supreme Court adopted it in 2018 and AB5 later put it into statute.
Proposition 22, approved by voters in 2020, altered that test’s application for certain app-based drivers. The reported settlement therefore does not require Lyft to reclassify drivers going forward or provide relief for work performed after that law took effect.
Lyft said it believes its drivers have always been properly classified under the law. The company also pointed to Proposition 22, saying California voters chose a system that retained contractor status while adding benefits and protections.
The state’s litigation against Uber over similar allegations remains pending, according to Ars Technica. The Lyft agreement resolves the claims against Lyft only.
This story draws on original reporting from Ars Technica.
