Ride-hailing company Lyft Inc. has agreed to pay $272.5 million to settle allegations of wage theft brought against the company in a lawsuit by San Francisco and other jurisdictions.
The lawsuit alleged that between 2016 and 2020, Lyft misclassified taxi drivers as independent contractors instead of employees, depriving them of rights to minimum wage, overtime, and reimbursement for work-related expenses.
The city attorneys of San Francisco, Los Angeles, and San Diego, and then-state Attorney General Xavier Becerra brought the lawsuit against ride-hailing companies Uber Technologies Inc. and Lyft Inc. in May 2020 in San Francisco Superior Court, alleging that they were violating state law by misclassifying drivers and engaging in wage theft.
In August 2020, the California Labor Commissioner’s Office filed a similar lawsuit in Alameda County Superior Court, and a San Francisco Superior Court judge consolidated the two lawsuits in September 2021, according to a news release issued by the California Department of Industrial Relations on Thursday.
This is the largest wage and hour settlement in California history, reflecting both the seriousness of the harm and our unwavering commitment to stand up for workers across California.
San Francisco City Attorney David Chiu
“For years, Lyft drivers provided essential services keeping our communities moving while being denied the wages and benefits they earned,” said San Francisco City Attorney David Chiu in a news release issued by his office Thursday. “Misclassification exploits workers, fuels inequality, and creates an unfair economy. This is the largest wage and hour settlement in California history, reflecting both the seriousness of the harm and our unwavering commitment to stand up for workers across California.”
During litigation, in November 2020, California voters passed Proposition 22, which established a separate framework for the classification of app-based drivers.
According to Proposition 22, app-based drivers are now classified as independent contractors, but the ride-hailing companies must provide a minimum earnings guarantee of at least 120% of the minimum wage, occupational accident insurance, and compensation for vehicle expenses, among other benefits.
However, the $272.5 million settlement covers allegations of misclassification between 2016 and 2020, when Proposition 22 had not yet gone into effect.
“The vast majority of rideshare drivers in California have always wanted to be independent contractors, and voters affirmed that when they passed Prop 22 in 2020,” said George Flynn, a spokesperson for Lyft in an email. “Lyft believes drivers have always been properly classified under the law, and we’re glad to put this case behind us.”
According to the news release issued by Chiu’s office, if the settlement is approved by the court, $237 million — or 87% of the settlement amount — will be reserved for Lyft drivers.
The compensation amounts to individual drivers will depend on the number of hours and miles driven between April 2016 and December 2020.
Litigation continues against Uber, which is the other defendant in the lawsuit, Chiu’s news release added.