LYFT AGREES $272.5M SETTLEMENT OVER DRIVER CLASSIFICATION CLAIMS

Lyft has agreed to pay $272.5 million to settle a lawsuit brought by California's attorney general and three city attorneys, who alleged the company misclassified drivers as independent contractors rather than employees between 2016 and 2020. California Attorney General Rob Bonta described the settlement as "the largest misclassification settlement in California's history" and said rideshare companies had "enjoyed massive growth and profits on the backs of drivers over the past decade, many who are from immigrant communities and communities of colour." Los Angeles City Attorney Hydee Feldstein Soto said the settlement showed that "companies must follow the law, pay their fair share, and play by the rules." Lyft said in a regulatory filing that the settlement would allow it to avoid "the costs and distraction of protracted litigation" and let management focus on its business objectives.

The case stems from a lawsuit filed in May 2020 by then-Attorney General Xavier Becerra against both Lyft and Uber, which argued the companies broke California law by declaring their drivers were not employees. The state's case relied on Assembly Bill 5, which set out a three-part test for determining whether a worker is an employee or an independent contractor. In November 2020, California voters approved Proposition 22, a ballot measure backed primarily by Uber and Lyft, which exempted rideshare companies from Assembly Bill 5. That exemption is why Thursday's settlement covers only the 2016-2020 period, before Proposition 22 took effect. Lyft chief executive David Risher pointed to the Proposition 22 vote in a statement responding to the settlement.

Thursday's settlement resolves the claims against Lyft only, while the attorney general's case against Uber over the same allegations continues. Rideshare companies have faced scrutiny over driver pay and treatment since the sector began in the early 2010s. The attorney general's office and the city attorneys involved have not detailed how the settlement funds will be distributed to affected drivers. No date has been given for the resolution of the ongoing case against Uber.