Lyft Pays $272.5 Million for Treating Drivers as Contractors

Lyft has agreed to pay $272.5 million to settle a lawsuit from California's attorney general and three city attorneys. They claimed Lyft broke the law by calling drivers independent contractors instead of employees between 2016 and 2020. That meant drivers missed out on minimum wage, overtime, and other protections. The case started in May 2020 and also sued Uber, but only Lyft settled. Uber's case continues.

For drivers, this is a big win—but not everyone is celebrating. The state calls it the largest misclassification settlement in California history. However, some experts say the amount is far too small compared to what drivers are owed. The money could have gone to rent and food for thousands of low-income, mostly immigrant workers. Lyft's CEO says drivers have always wanted to be contractors, and voters approved a 2020 law (Prop 22) that keeps them that way. He says Lyft is glad to move on.

So what does this mean for you? If you drive for Lyft, you won't get a direct check from this settlement—it goes to the state. But it could push other companies to treat workers better. For riders, fares might rise if companies have to pay more. And for taxpayers, the settlement helps recover some costs that were shifted onto public programs. The fight over gig worker rights is far from over.