Lyft will pay $12 million to settle driver misclassification case

Posted on: February 5th, 2016 by Steve Larson


Lyft, Inc. has agreed to pay $12.25 million and give additional job security to a proposed class of current and former California drivers suing the ride-hailing service in California federal court.  However, the company will not classify the drivers as employees.  Instead, Lyft will agree that it does not have the right to terminate drivers at will. With the at-will termination provision gone, drivers will now be able to turn down rides without fear of their account being deactivated.

Lyft also agreed to pay the costs to arbitrate drivers’ grievances and implement a prearbitration process.  Lyft will also provide drivers with passenger ratings for prospective riders.  In addition, Lyft will create a “favorite” driver option in which riders can designate their preferred drivers benefits

The suit is one of several that have been filed against Lyft and competitor Uber Technologies Inc. in state and federal courts contending that the ride share companies are misclassifying the drivers as independent contractors, but treating them like employees.