Lyft to drivers: Here's $12.25m, now shut up about employee rights

Lyft has agreed to pay out a $12.25m out-of-court settlement to end the class-action battle between itself and its drivers.

The proposed settlement [PDF], awaiting approval from Judge Vince Chhabria of the California Northern US District Court, would end the legal battle between the ride-sharing company and California drivers who claim Lyft has been violating California employment laws by misclassifying drivers as contractors rather than employees.

Under the terms of the proposed settlement, Lyft will pay out the class-action payment to drivers in California and will also agree to additional rules on how it handles account deactivations, driver ratings, and payment claims from drivers.

In exchange, drivers will drop their claims and will agree to be classified under state law as contract workers rather than employees of the company.

"While the agreement does not require Lyft to reclassify its Drivers as employees, it will provide significant benefits and added protections to Lyft Drivers that they do not currently have, require changes to Lyft's business practices that are more consistent with an independent contractor relationship, and provide monetary relief proportional to both the strength of the Drivers' claims and the amount of time they have Driven for Lyft," the settlement reads.

The $12.25m payout will be distributed among the class of Californians who drove for Lyft. Those who drove more than 30 hours per week for more than half of their time with Lyft will be eligible to receive larger payments.

In addition to the payment, Lyft will agree to waive the at-will provisions for terminating drivers and institute a process for notifying drivers as to the reasons why their accounts are being terminated. Lyft will also offer arbitration services for drivers looking to claim money from the service.

Meanwhile, a similar case involving fellow dial-a-ride company Uber is ongoing. Like the Lyft case, the class-action pits drivers against Uber in the debate of whether those who provide rides for the service are in fact employees covered by state employment laws, or, as the companies claim, at-will contractors subject to fewer protections. ®