Lyft settles landmark driver misclassification lawsuit for $272.5M
Summary
California’s attorney general and several city attorneys reached a $272.5 million settlement with Lyft. The settlement resolves claims that Lyft wrongly labeled drivers as independent contractors instead of employees from 2016 to 2020, which led to lower wages and fewer worker protections.Key Facts
- The lawsuit began in May 2020, accusing Lyft and Uber of misclassifying drivers to avoid paying full wages and benefits.
- The $272.5 million settlement applies only to Lyft; the legal case against Uber is still ongoing.
- California used Assembly Bill 5 (AB5), a law defining who counts as an employee versus an independent contractor, as the basis for the lawsuit.
- In 2020, California voters passed Proposition 22, allowing rideshare companies to keep classifying drivers as contractors, which is why the settlement only covers up to 2020.
- Lyft’s CEO said most drivers wanted to remain independent contractors and praised Proposition 22 for providing new benefits.
- Critics say the settlement amount is small compared to the money drivers lost and does not fully fix ongoing issues.
- The California Gig Workers Union was officially recognized in 2023 to support rideshare and gig economy workers’ rights.
- Officials said the settlement sends a message that companies must follow laws and treat workers fairly.
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