More than $237M will go to drivers misclassified as contractors
Lyft has agreed to pay California $272.5 million to settle claims that the company misclassified its drivers as independent contractors rather than employees, the state attorney general’s office announced Thursday. California Attorney General Rob Bonta described the agreement as a “landmark win for workers” and said it was the largest settlement involving wage-theft claims in the state’s history.
“Rideshare companies like Lyft have enjoyed massive growth and profits on the backs of drivers over the past decade, many of whom are from immigrant communities and communities of color,” Bonta said. “Lyft’s success would not be possible without the drivers Lyft sought to unfairly short-change.”
The settlement, which is subject to court approval, will distribute more than $237 million to the thousands of Lyft drivers covered by the lawsuit. It covers claims of alleged violations between April 2016 and December 2020, during which the company treated its California drivers as independent contractors rather than employees.
California Labor Commissioner Lilia García-Brower attributed the outcome to drivers who had pressed their claims forward. “This settlement is about the workers who came forward and spoke up,” she said. “Their voices made this outcome possible.”
Lyft, in a statement, maintained that drivers have always been properly classified under the law. “We’re glad to put this case behind us,” the company said.
Independent contractors in California do not receive the benefits that employees are entitled to under state law, including Social Security contributions, health insurance, paid sick days and overtime. Minimum-wage laws and other federal and state labor protections also do not apply to independent contractors.
The classification fight has played out in California for more than a decade. The state first sued Lyft in 2020, and the cities of Los Angeles, San Francisco and San Diego subsequently joined the case, which was later consolidated with other suits brought on behalf of thousands of Lyft drivers.
The litigation continued against a complicated legal backdrop. In 2020, Lyft joined Uber and other gig companies in supporting Proposition 22, a state ballot measure that exempted ride-share drivers from California’s worker-classification law. Voters approved the measure in November 2020, and its passage led to several appeals in the state’s case against Lyft.
A near-identical California lawsuit against Uber remains active, according to the attorney general’s office. In 2023, Uber and Lyft jointly agreed to pay $328 million to settle similar misclassification claims brought by New York’s attorney general.