Lyft will pay $272.5 million to settle a May 2020 lawsuit that alleged both it and Uber were misclassifying employees as contractors, California Attorney General Rob Bonta announced on Thursday. The lawsuit was filed following the passage of Assembly Bill 5, which classified gig workers as employees, but before the reclassification introduced by Prop 22.
If the settlement is approved by the court, Lyft will pay $272.5 million in penalties, with at least $237,075,000 reserved for paying back workers for minimum wage and benefits. Driver eligibility and compensation will be based on hours and miles driven between April 5, 2016, through December 15, 2020.
The passage of Assembly Bill 5 in 2019 codified the "ABC test" into law, criteria businesses must use to prove workers are independent contractors. The original language allowed Lyft and Uber drivers to be classified as employees. Both companies backed Prop 22 in November 2020, which reclassified gig workers as contractors while guaranteeing certain benefits.
Workers have challenged Prop 22's legality, but the California Supreme Court upheld it in 2024. While Lyft's settlement resolves the state's claims, Uber's portion of the lawsuit remains unresolved.
Source: Engadget · Summarized by HeadlinesBriefing