Lyft to pay $272.5M in California driver misclassification lawsuit

SAN FRANCISCO - Lyft has agreed to pay $272.5 million – the largest wage-and-hour settlement in state history – to settle a suit alleging the rideshare company misclassified California drivers as independent contractors, denying them wage and workplace protections required under state law, plaintiffs and state officials announced on Thursday. 

Lyft to pay $272.5M 

Why you should care:

Of the total settlement, 87% will go directly to drivers.

The settlement was announced by the California Labor Commissioner’s Office, California Attorney General Rob Bonta, and the cities of San Francisco, San Diego and Los Angeles, who were all part of the case that originated in Alameda County and then consolidated in San Francisco Superior Court in September 2021.  

The same plaintiffs are also litigating this matter against Uber, the remaining defendant in the case, Uber Technologies Wage and Hour Cases in San Francisco Superior Court. 

"Every worker deserves to be paid fully and fairly," San Francisco City Attorney David Chiu said in a statement. "For years, Lyft drivers provided essential services keeping our communities moving while being denied the wages and benefits they earned. Misclassification exploits workers, fuels inequality, and creates an unfair economy. This is the largest wage and hour settlement in California history, reflecting both the seriousness of the harm and our unwavering commitment to stand up for workers across California."

Bonta said that rideshare companies like Lyft have "enjoyed massive growth and profits on the backs of drivers over the past decade, many who are from immigrant communities and communities of color."

"Lyft’s success would not be possible without the drivers who Lyft sought to unfairly short-change hard-working employees deserve full compensation for their labor," Bonta said. 

The settlement, subject to court approval, resolves claims against Lyft for misclassifying their drivers as independent contractors in violation of the California Labor Code and Unfair Competition Law between 2016 and 2020.

Lyft: Closing chapter before Prop. 22

The backstory:

In a statement, Lyft spokesman George Flyyn said that if the court approves this settlement, it 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, and voters affirmed that when they passed Prop 22 in 2020, giving drivers new benefits and protections while preserving their flexibility. And since then, Lyft has gone further than Prop 22 requires, becoming the only rideshare company with a fee cap," Flynn wrote. "Lyft believes drivers have always been properly classified under the law, and we're glad to put this case behind us. We remain laser focused on helping create more earnings for drivers and more affordable rides for riders."

California voters approved Proposition 22 in November 2020, granting app-based transportation and delivery companies an exception to Assembly Bill 5 by classifying their drivers as independent contractors, rather than employees. 

Prop. 22 was challenged in California state courts in 2021, and was upheld on appeal in 2023 and by the California Supreme Court in 2024.

Because that framework took effect after the period covered by this case, the settlement does not require Lyft to reclassify drivers going forward or provide relief for later work, the Labor Commissioner's Office explained.

How to get paid 

What's next:

The Labor Commissioner's Office filed a lawsuit against Lyft in Alameda County Superior Court in August 2020. 

The lawsuit alleged that Lyft treated drivers as independent contractors rather than as employees as required under state law at the time. 

As a result, plaintiffs alleged that drivers were denied minimum wages and overtime, rest-break premiums, reimbursement for business expenses, accurate wage statements, timely wage payments, paid sick leave and other protections.

The restitution amount will be set into a fund managed by a third-party settlement administrator, officials said.  

Driver eligibility and compensation will be based on the number of hours and miles driven between April 5, 2016, through December 15, 2020.

After the settlement is approved and Lyft begins making payments to the settlement fund, eligible workers will be contacted by the third-party settlement administrator about when to expect a payment. 

The settlement administrator will establish a website, email address, and call center to inform and answer questions from drivers who believe they are eligible for restitution. 

Officials said additional details about these resources will be available in the near future.