Key facts
- Lyft will pay $272.5 million to settle a driver misclassification lawsuit.
- The settlement covers drivers from 2016 to 2020.
- Lyft CEO David Risher stated drivers prefer independent contractor status.
- Law professor Veena Dubal criticized the settlement amount as insufficient.
- California voters passed Proposition 22 in 2020, exempting ride-hailing firms from AB5.
Lyft has agreed to a $272.5 million settlement to resolve a class-action lawsuit that alleged the company misclassified its drivers as independent contractors. The settlement specifically covers the period between 2016 and 2020, preceding the passage of California's Proposition 22.
Proposition 22, which was largely supported by Uber and Lyft, created an exemption for ride-hailing companies from Assembly Bill 5, a law that had aimed to reclassify many independent contractors as employees. In a statement, Lyft CEO David Risher highlighted the outcome of Proposition 22, asserting that the majority of rideshare drivers in California prefer to remain independent contractors and that voters affirmed this choice. Risher added that Lyft believes drivers have always been correctly classified and expressed satisfaction in putting the case behind the company.
However, Veena Dubal, a law professor at the University of California, Irvine, who has been a vocal critic of ride-hailing companies, suggested that the settlement should not be seen as a complete victory for drivers. Dubal noted that the sum is small relative to what drivers are owed and that the funds would have significantly impacted the lives of low-income, often immigrant and minority workers. She expressed concern that the current system is not functioning as it should.
In recent years, gig workers have increasingly organized to advocate for better pay and working conditions. Last year, California Governor Gavin Newsom signed a law enabling the formation of a union for gig workers, and in August, the state's labor board officially recognized the new California Gig Workers Union.