Lyft to pay $272.5M to settle driver classification lawsuit

Ride-hailing company Lyft has agreed to pay a substantial $272.5 million to settle a lawsuit that accused the firm of violating California state law by improperly classifying its drivers as independent contractors instead of traditional employees.

In a regulatory filing, the company explained that entering into this settlement will allow it to bypass the mounting expenses and distractions tied to prolonged litigation, giving management the opportunity to stay focused entirely on its primary business objectives.

The legal dispute stems from an action initiated by the California Labor Commissioner’s Office (LCO) back in August 2020, which alleged that Lyft failed to treat its drivers as proper employees under state guidelines at the time.

According to the lawsuit, drivers were allegedly deprived of standard employee benefits and protections, including:

• Guaranteed minimum wage compensation
• Overtime pay for extended hours
• Paid sick leave provisions
• Timely wage payments and standard worker protections

"This settlement is about the workers who came forward and spoke up. Their voices made this outcome possible."

Lilia García-Brower

California Labor Commissioner Lilia García-Brower stated that her office will bypass taking any portion of the settlement funds, directing them straight to the drivers who originally filed wage claims. The proposed settlement still requires formal approval from a judge and covers alleged infractions occurring between April 6, 2016, and December 15, 2020.