Lyft Agrees to $272.5 Million California Wage Settlement Over Worker Classification
A California wage-and-hour lawsuit will be resolved by Lyft through a $272.5 million payment, setting a record for the largest payout of its kind in the state’s history. The agreement resolves allegations that the ride-hailing company misclassified its workers as independent contractors between 2016 and 2020, denying them required wage and workplace protections. Under the terms of the settlement, 87% of the total funds will go directly to drivers.
State Allegations and The 2020 Proposition 22 Context
The California Labor Commissioner’s Office filed the lawsuit in 2020 in Alameda County Superior Court. The state alleged that Lyft failed to provide minimum wages, overtime, rest-break premiums, business expense reimbursements, accurate wage statements, timely wage payments, and sick leave.
In 2020, California voters passed Proposition 22, allowing Lyft and Uber drivers to be classified as contractors.
“If approved, this settlement closes a chapter from a very different time, before Prop 22,” Lyft said in a statement. “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.”
Lyft maintained that drivers have always been properly classified under the law. “We’re glad to put this case behind us,” the company added. “We remain laser focused on helping create more earnings for drivers and more affordable rides for riders.”
Rideshare Drivers United Helps Drivers File Wage Claims
Up through 2020, the Labor Commissioner’s Office noted that wage claims were filed against the San Francisco-based company Lyft by drivers with the assistance of the association Rideshare Drivers United. Initiated initially as a separate action, the lawsuit later became part of a coordinated proceeding involving actions brought by the California attorney general and the city attorneys of Los Angeles, San Diego, and San Francisco. The cases were officially coordinated in San Francisco Superior Court in September 2021.
“This settlement is about the workers who came forward and spoke up,” California Labor Commissioner Lilia García-Brower said in a statement. “We pursued this case to ensure workplace protections have real meaning and to recover as much as possible for drivers.”
Recent Union Certification for California Gig Workers
Just under a month after Uber and Lyft drivers in California first attained collective bargaining power, the financial settlement was reached. The California Public Employment Relations Board officially recognized the California Gig Workers Union in September after the organization secured support from 30% of active drivers in the state in August. That unionization effort followed the passage of Assembly Bill 1340, which granted gig ride-hailing drivers the legal right to unionize and collectively bargain.
Frequently Asked Questions About the Lyft Settlement
Who is eligible to receive funds from the $272.5 million settlement?
Eighty-seven percent of the total settlement goes directly to drivers who drove for Lyft in California between 2016 and 2020, the period covered by the state’s misclassification allegations.
Which government entities brought the legal action against Lyft?
The California Labor Commissioner’s Office initiated the lawsuit in 2020, which was later coordinated in San Francisco Superior Court alongside actions filed by the California attorney general and the city attorneys of Los Angeles, San Diego, and San Francisco.
Does Proposition 22 still govern driver classification in California?
Yes, Proposition 22 passed in 2020 and allowed Lyft and Uber drivers to be classified as contractors, a framework Lyft noted was in effect after the historical period targeted by this lawsuit.
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