The big fight over whether ride-hailing drivers are contractors or employees — a contest that, pundits proposed, might threaten the very foundation of business models for the likes of Lyft and Uber — is close to another temporary victory for ride-hailing companies.
Last month, Uber agreed to a major settlement, paying $100 million to keep their California drivers as contractors, and today, Reuters, the Wall Street Journal, and others report that Lyft has agreed to a similar settlement with its drivers. The smaller Uber rival is willing to pay $27 million to maintain the status quo.
Lyft originally proposed a $12.25 million deal which US District Judge Vince Chhabri saw fit to reject. For the newly calculated sum, Lyft's attorneys determined that, based on a government-set mileage reimbursement rate, its drivers would have recovered $156 million if they had been, or would found to have been, employees.
Doing the math, the $27 million settlement is about 17 percent of that sum. Uber's settlement for $100 million was 12 percent of similar potential damages for which it might have been found liable.
As the Chronicle explains, the settlement offer would not specify drivers' employment status, which Lyft says maintains their status as independent contractors. “Drivers on the Lyft platform will continue to be independent contractors,” said the company.
"We are proud to have reached this new agreement," said Shannon Liss-Riordan, an attorney who has represented drivers for both Uber and Lyft in the respective class actions, saying the settlement amounts "will provide significant payments to Lyft drivers who have put a lot of their time into [Lyft]." A hearing for the deal is scheduled for June.
Liss-Riordan previously admitted that hoping for legal wins in these cases would have been a stretch in California, where Uber and Lyft are quite popular. "The debate won't end here," she said, following the settlements with Uber in cases in both California and Massachusetts, implying that cases in labor-friendly states where sentiments about the gig economy are more circumspect are likely to come down the line.