Lyft to Pay Record $272.5 Million in California Driver Wage Settlement

Lyft will pay $272.5 million to resolve a California wage-and-hour lawsuit, marking the largest such settlement in the state’s history, according to dir.ca.gov. The agreement resolves allegations that the ride-hailing company misclassified its workers as independent contractors between April 6, 2016, and December 15, 2020, denying them mandatory state workplace protections. Eighty-seven percent of the total settlement will go directly to drivers, while the California Labor Commissioner’s Office will forgo its $5.45 million share of penalties to increase payouts to claimants.

Lyft Agrees to Record $272.5 Million Settlement Over Worker Misclassification

The California Labor Commissioner’s Office filed the lawsuit against San Francisco-based Lyft in Alameda County Superior Court in August 2020. State officials alleged that Lyft failed to provide minimum wages and overtime, rest-break premiums, reimbursement for business expenses, accurate wage statements, timely wage payments, and paid sick leave. The litigation eventually joined a coordinated proceeding in San Francisco Superior Court alongside actions brought by the California Attorney General and the city attorneys of Los Angeles, San Diego, and San Francisco.

“This settlement is about the workers who came forward and spoke up,” California Labor Commissioner Lilia García-Brower said in a statement. García-Brower added that her office pursued the case to ensure workplace protections carry real meaning and to secure maximum financial recovery for drivers. More than 1,600 drivers who filed wage claims through the administrative process will receive additional funds from the redirected state penalties, alongside a multiplier that doubles the mileage used to calculate their restitution payments.

Prop 22 and the Divide Over Independent Contractor Status

The legal battle unfolded against a backdrop of sweeping legislative and voter-approved changes regarding app-based labor in California. In November 2020, voters approved Proposition 22, which allows ride-hailing companies like Lyft and Uber to classify drivers as independent contractors under specific criteria. Because that framework took effect after the period covered by the lawsuit, the settlement does not require Lyft to reclassify its drivers going forward or provide retroactive relief for work completed after December 15, 2020.

“Lyft believes drivers have always been properly classified under the law, and we’re glad to put this case behind us,” the company said in an official statement. “We remain laser focused on helping create more earnings for drivers and more affordable rides for riders.” Lyft also stated that the agreement closes a chapter from a time before Proposition 22, asserting that the vast majority of rideshare drivers in California have consistently preferred independent contractor status.

Union Certification Follows Years of Driver Advocacy

The advocacy association Rideshare Drivers United assisted drivers in filing wage claims against Lyft through 2020, according to the Labor Commissioner’s Office. The resolution arrives shortly after Uber and Lyft drivers in California secured collective bargaining power for the first time. Following the passage of Assembly Bill 1340, 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.

A third-party settlement administrator will manage the restitution fund and contact eligible individuals directly. The administrator is slated to establish a dedicated website, email address, and call center to assist drivers with questions regarding their eligibility and payouts.