Lyft Comes to Terms with $272.5 Million Settlement Over Worker Classification Lawsuit
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Lyft agreed to pay $272.5 million to settle a May 2020 lawsuit alleging that both Lyft and Uber misclassified employees as independent contractors, according to a statement issued by California Attorney General Rob Bonta on Thursday.
Should the court approve the deal, Lyft would disburse $272.5 million in penalties, with at least $237,075,000 allocated to recover undervalued minimum wages and benefits owed to workers.
The 2019 enactment of Assembly Bill 5 established the “ABC test”—a legal standard requiring businesses to demonstrate that workers enjoy independent contractor status—and mandated employee classification for safety and benefit compliance. However, when the classification threatened the gig business model of platforms such as Lyft and Uber, both companies backed Proposition 22 in November 2020, introducing carve-outs that permitted freelancers to remain classified as contractors while securing healthcare subsidies.
Although gig workers have contested the constitutionality of Proposition 22, the California Supreme Court affirmed its validity as recently as 2024. This settlement concludes Lyft’s claim and represents a significant victory for gig labor advocates, though Uber’s related allegations remain unresolved.
