California, Lyft reach $272.5 million settlement over driver classification dispute
By Cecilio Padilla
Lyft has agreed to pay $272.5 million to settle California allegations that it shortchanged drivers by improperly classifying them as independent contractors, state officials announced Thursday.
The settlement, which still requires approval in San Francisco Superior Court, would resolve claims brought by California Attorney General Rob Bonta’s office and the city attorneys of San Francisco, Los Angeles and San Diego.
“Lyft’s success would not be possible without the drivers Lyft sought to unfairly short-change. Hard-working employees deserve full compensation for their labor,” Bonta said.
The company, however, continues to dispute the state’s allegations and maintains its drivers were properly classified.
“Lyft believes drivers have always been properly classified under the law, and we’re glad to put this case behind us,” the rideshare company said in a statement to CBS News.
Under the agreement, at least $237.075 million would be set aside for drivers who worked for Lyft between April 5, 2016, and Dec. 15, 2020. Individual payments would be based on the number of hours and miles driven during that period.
Bonta called it the largest worker misclassification settlement in California history and said thousands of drivers could receive compensation.
“Subject to court approval, today’s settlement will put money back in the pockets of thousands of drivers who have waited for their long-deserved pay,” Bonta said.
The state’s lawsuit, filed in 2020, alleged Lyft violated California labor laws by classifying drivers as contractors rather than employees. State officials argued that classification deprived drivers of protections including minimum wage, overtime and reimbursement for work-related expenses.
California had recently tightened its rules for determining whether workers could be classified as independent contractors, including through a 2019 law that expanded a California Supreme Court test for worker classification.
That landscape changed with Proposition 22, which voters approved in 2020. The measure allows app-based rideshare and delivery drivers to remain independent contractors while providing certain benefits and earnings protections. The California Supreme Court unanimously upheld the measure in 2024.
“If approved, this settlement closes a chapter from a very different time, before Prop 22,” Lyft said in its statement to CBS News.
The settlement covers work performed before Proposition 22 took effect. In a blog post Thursday, Lyft CEO David Risher said resolving the case would spare the company “a long, costly fight” and allow it to focus on drivers and riders.
Lyft also pointed to changes made since 2020, including benefits under Proposition 22 and a cap on the share of rider payments the company keeps as fees.
If the settlement is approved, a third-party administrator will contact eligible drivers once Lyft begins making payments.
