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Lyft agrees to pay California $272.5m in wage theft settlement

Lyft has agreed to a $272.5m settlement with California over claims of misclassifying drivers as independent contractors, rather than employees. Over $237m of this sum is intended for distribution to drivers.

  • Lyft will pay $272.5m to settle claims of misclassifying drivers in California.
  • More than $237m from the settlement is to be distributed to thousands of Lyft drivers.
  • California's attorney general described the agreement as the state's largest-ever wage theft settlement.

Lyft has agreed to pay the state of California $272.5m to settle claims that it mislabeled drivers as independent contractors, rather than employees, leading to alleged wage theft. California's attorney general, Rob Bonta, called the agreement a "landmark win for workers" and stated it was the largest settlement for wage theft claims in the state's history.

The settlement, which requires court approval, addresses alleged violations between April 2016 and December 2020. If approved, over $237m will be distributed among thousands of Lyft drivers involved in the suit.

Lyft stated that its drivers have always been properly classified under the law and expressed satisfaction in putting the case behind them. The debate over driver classification has been ongoing in California for more than a decade, with independent contractors not receiving benefits such as social security, health insurance, paid sick days, or overtime.

A similar lawsuit against Uber is currently ongoing. In 2023, both Uber and Lyft jointly agreed to pay $328m to settle similar claims made by New York's attorney general.

Why this matters: This settlement marks the largest in California's history for wage theft claims, addressing the classification of gig economy workers and their access to employment benefits and protections.

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