Lyft settled California driver misclassification claims for $272.5 million

Lyft has reached a $272.5 million settlement with the state of California and three of its largest cities to resolve claims that the ride-hailing company improperly labeled drivers as independent contractors instead of employees. This decision was made to save money and avoid providing the required minimum wage, overtime, and other protections under federal and state laws.

California initiated the lawsuit against Lyft in 2021, along with Los Angeles, San Francisco, and San Diego, as part of a series of similar cases against gig economy companies that have been going on for over a decade. All these cases were later merged together, representing thousands of Lyft drivers. The settlement, awaiting court approval, covers alleged violations from April 2016 to December 2020.

Lyft disputed the claims, asserting that drivers were correctly classified as independent contractors under the law. The company expressed its relief at putting the case behind it. However, this settlement is the largest involving wage theft claims in California's history, according to the state Labor Commissioner's Office.

Interestingly, in 2023, Lyft and Uber jointly agreed to pay $328 million to settle similar wage theft claims brought by the New York Attorney General.