Lyft will pay $272.5 mn, plus accrued interest, to resolve allegations that it misclassified California drivers as independent contractors and denied them wage and workplace protections required under state law.
The California Labor Commissioner’s Office said the agreement is the largest wage-and-hour settlement in state history. About 87% of the total settlement will go directly to drivers.
The case covers alleged violations between April 6, 2016, and Dec. 15, 2020. During that period, the Labor Commissioner’s Office alleged Lyft treated drivers as independent contractors when state law required them to be classified as employees.
According to the state, the classification deprived drivers of minimum wages and overtime, rest-break premiums, reimbursement for business expenses, accurate wage statements, timely wage payments and paid sick leave. The allegations also included other workplace protections available to employees under California law.
More than 1,600 drivers who filed wage claims through the Labor Commissioner’s administrative process will receive additional payments. The agency is redirecting its $5.45 mn share of penalties payable to the state so those funds go to the drivers who filed claims.
Those claimants will also receive a multiplier that doubles the mileage used to calculate their payments.
California Labor Commissioner Lilia García-Brower said the settlement resulted from drivers coming forward and pursuing their claims. She said her office decided to give up its portion of the settlement so more money would reach workers directly.
“This settlement is about the workers who came forward and spoke up,” García-Brower said. “Their voices made this outcome possible.”
The Labor Commissioner’s Office filed its lawsuit against Lyft in Alameda County Superior Court in August 2020. The case later became part of coordinated litigation involving an enforcement action from the California Attorney General and the city attorneys of Los Angeles, San Diego and San Francisco.
Private lawsuits filed under California’s Private Attorneys General Act were also included in the coordinated proceedings. The cases were moved into a coordinated process in San Francisco Superior Court in September 2021.
Rideshare Drivers United helped bring driver complaints to the Labor Commissioner’s Office and assisted workers with filing wage claims against Lyft through 2020.
The settlement deals only with work performed before California’s Proposition 22 framework took effect. Voters approved Proposition 22 in November 2020, creating a separate classification structure for app-based drivers who meet specified conditions.
Because that framework came after the period covered by the case, the agreement does not require Lyft to reclassify drivers in the future. It also does not provide relief for work performed after Dec. 15, 2020.
The restitution funds will be placed with a third-party settlement administrator, which will contact eligible drivers directly. The administrator will also establish a website, email address and call center for people who believe they qualify for restitution, with further information expected later.
