Lyft is paying $272.5M to settle lawsuit over how it classified drivers
Lyft has agreed to a $272.5 million settlement to resolve a lawsuit regarding the misclassification of drivers as independent contractors in California. The settlement covers claims from 2016 to 2020, a period marked by significant legal battles over gig economy labor laws.
Why it matters
This settlement highlights the ongoing legal and financial risks companies face regarding the classification of gig workers in the US labor market.
Lyft has agreed to pay $272.5 million to settle a lawsuit accusing the ride-hailing company of violating California law by misclassifying drivers as independent contractors, instead of employees.
The company said in a regulatory filing that it believes the settlement will allow it to avoid the “costs and distraction of protracted litigation and enable management to maintain its focus on executing its business objectives.”
The settlement stems from a lawsuit filed by the California Labor Commissioner’s Office in August 2020 that accused Lyft of treating drivers as independent contractors rather than as employees, as required under state law at the time.
The lawsuit alleged that drivers were denied minimum wage and overtime as well as other benefits and protections provided to employees, including paid sick leave and timely wage payments.
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