Lyft agreed to pay the state of California $272.5m on Thursday to settle claims that it stole drivers’ wages by mislabeling them as independent contractors rather than employees.
Rob Bonta, California’s attorney general, called the agreement 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, subject to court approval, covers alleged violations between April 2016 and December 2020. Once approved, more than $237m will be distributed to the thousands of Lyft drivers who were involved in the suit.
Lyft said in a statement that drivers have always been properly classified under the law and “we’re glad to put this case behind us”.
The debate over driver classification has raged in California for more than a decade. As independent contractors, Lyft and Uber drivers don’t get benefits including social security, health insurance, paid sick days and overtime. Minimum wage laws and other labor protections under federal and state governments also do not apply to independent contractors.
California’s lawsuit against Lyft was first brought in 2020, and the cities of Los Angeles, San Francisco and San Diego subsequently joined on. Afterwards, the case was merged with other suits brought on behalf of thousands of Lyft drivers.
As the litigation was under way, Lyft joined Uber and other gig companies in putting forward a state ballot measure, Proposition 22, to exempt ride-share drivers from California’s law. In a win for the companies, that proposition passed in November 2020, leading to several appeals in the state’s case against Lyft.
The attorney general’s office said it remained steadfast in its demands for getting drivers wages and protections, which ultimately led to Thursday’s settlement agreement. A near-identical lawsuit against Uber is still continuing.
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“This settlement is about the workers who came forward and spoke up,” said Lilia García-Brower, California’s labor commissioner. “Their voices made this outcome possible.”
In 2023, both Uber and Lyft jointly agreed to pay $328m to settle similar claims by New York’s attorney general.
