Lyft has agreed to pay $272.5 million to settle a lawsuit that accused the ride-hailing company of violating California law by misclassifying drivers as independent contractors instead of employees. The company stated in a regulatory filing that it believes this settlement will help avoid the costs and distractions of prolonged litigation, allowing management to focus on executing its business objectives.
Background of the Lawsuit
The settlement arises from a lawsuit filed by the California Labor Commissioner’s Office in August 2020. The lawsuit claimed that Lyft treated drivers as independent contractors rather than employees, as mandated by state law at that time. Allegations included that drivers were denied minimum wage, overtime, and other benefits and protections typically afforded to employees, such as paid sick leave and timely wage payments.
“"This settlement is about the workers who came forward and spoke up. Their voices made this outcome possible," said California Labor Commissioner Lilia García-Brower in a statement. She added that the Labor Commissioner’s Office will forgo its share of the settlement and direct those funds to drivers who filed wage claims.
