Lyft settles California driver misclassification suit for $272.5M
California's attorney general and three city attorneys announced a $272.5 million settlement with Lyft, according to a Thursday statement. The settlement follows allegations that the company "committed wage theft by misclassifying drivers as independent contractors rather than employees" between 2016 and 2020. Attorney General Rob Bonta called it the largest misclassification settlement in California's history.
The case dates back to May 2020, when then-Attorney General Xavier Becerra, who is now the Democratic candidate for governor, sued both Uber and Lyft. That lawsuit said the ridehailing companies evaded state law when they declared that their drivers were not employees. Thursday's settlement affects only Lyft, while the case against Uber continues.
Bonta said in the statement: "We are proud to announce this landmark win for workers, the largest misclassification settlement in California's history." He added that 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.
The city attorneys echoed the sentiment. Los Angeles City Attorney Hydee Feldstein Soto said in the same statement that Los Angeles and its statewide partners will not allow businesses to exploit their workers and evade their obligations under the law. She said that when companies misclassify their workers, they deny them critical protections and shift the burden onto taxpayers, and that the settlement sends a clear message: companies must follow the law, pay their fair share, and play by the rules.
The article adds background: ever since the rideshare companies began in the early 2010s, they have been scrutinized for underpaying and mistreating drivers. The state law California used to challenge the companies is Assembly Bill 5 (AB5), which enshrined a three-part test for deciding whether someone is properly classified as an independent contractor or an employee.
Key facts
- California's attorney general and three city attorneys announced a $272.5 million settlement with Lyft, per a Thursday statement.
- The allegation: Lyft committed wage theft by misclassifying drivers as independent contractors rather than employees between 2016 and 2020.
- Attorney General Rob Bonta called it the largest misclassification settlement in California's history.
- The suit dates to May 2020, when then-Attorney General Xavier Becerra sued both Uber and Lyft; the settlement covers only Lyft and the case against Uber continues.
- The state used Assembly Bill 5 (AB5), which enshrined a three-part test for contractor versus employee status.
Why it matters
Bonta describes the figure as the largest misclassification settlement in California's history, and the case is one of the state's main challenges to how gig platforms classify their drivers. The 2020 suit alleged that Uber and Lyft evaded state law by declaring drivers were not employees. Resolving the Lyft half of that case for $272.5 million is a concrete outcome after years of scrutiny over how rideshare companies treat drivers.
Who it affects
Lyft is the settling defendant. Uber is a co-defendant in the original 2020 suit, and its case continues. The statement frames drivers as the beneficiaries of the action, noting that many are from immigrant communities and communities of color. The article does not state how many drivers are covered.
How to use it
This is a legal outcome, not a product or tool. For readers who follow gig-economy regulation, the useful reference points are AB5 and its three-part test for classifying a worker as an independent contractor or an employee, and the 2016 to 2020 period that the allegations cover.
How solid is it
The facts come from a Thursday statement by California's attorney general and three city attorneys, as reported by the article. The wage theft claim is an allegation, as the article presents it. The settlement amount and the fact that it applies only to Lyft are stated plainly. The exact calendar date of the announcement is not given.
Risks and caveats
How the $272.5 million is split (payments to drivers, penalties, fees) is not stated. Whether Lyft admitted wrongdoing is not stated, and Lyft's response is not given in the text. Whether Lyft drivers will be reclassified as employees going forward is not stated. No timeline or details on the continuing case against Uber are given.
“We are proud to announce this landmark win for workers, the largest misclassification settlement in California’s history.”
— Rob Bonta, California Attorney General