Lyft settles landmark driver misclassification lawsuit for $272.5M

In November 2020, California voters approved a state ballot measure, Proposition 22, which was organized primarily by Uber and Lyft. The new law gave ride-hailing companies an exemption to AB5—which is why this settlement only covers the 2016-2020 period.

In a statement provided to Ars Technica, Lyft CEO David Risher pointed to the Proposition 22 vote. “The vast majority of rideshare drivers in California have always wanted to be independent contractors,” he said, “and voters affirmed that when they passed Prop 22 in 2020, giving drivers new benefits and protections while preserving their flexibility. And since then, Lyft has gone further than Prop 22 requires, becoming the only rideshare company with a fee cap. Lyft believes drivers have always been properly classified under the law, and we’re glad to put this case behind us.”

Veena Dubal, a law professor at the University of California, Irvine who has long been an outspoken critic of Uber and Lyft, emailed Ars to say that Thursday’s settlement should not be viewed as a pure win for drivers.

“While the state should be lauded for taking on these behemoth firms, this is a paltry sum compared to what drivers are owed,” she wrote. Their wages “would have gone to rent and food for families. And the fact that they only have to pay a small portion of what was owed to thousands of low-income, mostly immigrant and racial-minority workers means that this system is not working the way it should.”

In recent years, workers have continued to organize and advocate for better pay and working conditions. In August, the state’s labor board recognized the new California Gig Workers Union, which was formed after Gov. Gavin Newsom signed a law last year allowing such a union to be formed.