Lyft Agrees to $272.5M Settlement In California Driver Misclassification Lawsuit

After six years of litigation, Lyft has agreed to pay $272.5 million to settle claims that it misclassified California drivers as independent contractors and denied them employee protections.

Lyft drivers who worked in California from 2016 through 2020 will receive compensation under a $272.5 million settlement over the company’s classification of them as independent contractors.

The settlement, announced Thursday by California Attorney General Rob Bonta, the California Labor Commissioner’s Office, and the city attorneys of San Francisco, San Diego, and Los Angeles, would send about 87% of the money directly to drivers, as KTVU reports. At least $237 million will go toward compensating drivers, making it the largest wage-and-hour settlement in California history. 

The settlement still requires approval from San Francisco Superior Court.

The case stems from a lawsuit filed by the Labor Commissioner’s Office in Alameda County Superior Court in August 2020, alleging that Lyft improperly treated its California drivers as independent contractors rather than employees. The lawsuits brought by the state and the cities of San Francisco, San Diego, and Los Angeles were later consolidated in San Francisco Superior Court in September 2021.

According to CalMatters, the state alleged that drivers were consequently denied minimum wage, overtime, rest-break premiums, reimbursement for work expenses, accurate wage statements, timely wage payments, paid sick leave, and other protections afforded to employees under California law.

At a Thursday press conference in San Francisco, Bonta said drivers who worked for Lyft between April 5, 2016, and December 15, 2020, are eligible for compensation based on the number of hours and miles they drove.

“Make no mistake, misclassification is how companies cheat workers,” Bonta said.

The settlement covers a period before California voters approved Proposition 22 in November 2020. The law exempted app-based transportation and delivery companies from the state's employee-classification rules, allowing companies including Lyft to continue treating drivers as independent contractors while providing certain new benefits and protections.

Lyft spokesman George Flynn said the settlement, if approved, would close a chapter from a “very different time, before Prop 22,” per KTVU. Lyft maintains that its drivers were properly classified under the law and said most California rideshare drivers have wanted to remain independent contractors.

The company can make its settlement payments over four years, according to a filing with the Securities and Exchange Commission.

KTVU notes that Prop 22 has since survived several legal challenges, including a California Supreme Court ruling in 2024. Because the law took effect after the period covered by the lawsuit, the settlement does not require Lyft to reclassify its drivers going forward or compensate them for work after December 15, 2020.

Once the settlement is approved and Lyft begins putting money into the settlement fund, a third-party administrator will contact eligible drivers. The administrator will also establish a website, email address, and call center for drivers seeking information about the payments.

California Labor Commissioner Lilia García-Brower said her office is giving up its $5.45 million share of the settlement so that more money can go directly to drivers. 

“This settlement is about the workers who came forward and spoke up. Their voices made this outcome possible,” said Garcia-Brower in a news release. “We pursued this case to ensure workplace protections have real meaning and to recover as much as possible for drivers.”

More than 1,600 Lyft drivers filed wage claims with the Labor Commissioner’s Office, although the settlement could ultimately cover additional drivers who meet the eligibility requirements.

San Francisco City Attorney David Chiu said the drivers provided essential services while being denied wages and benefits the state alleged they had earned.

“Misclassification exploits workers, fuels inequality, and creates an unfair economy,” said Chiu, per KTVU. “This is the largest wage and hour settlement in California history, reflecting both the seriousness of the harm and our unwavering commitment to stand up for workers across California."

The state and cities also sued Uber over similar allegations, and that case remains pending. San Diego City Attorney Heather Ferbert said Thursday that the Lyft settlement does not resolve the broader fight over rideshare driver classification, as CalMatters reports.

“Lyft is only part of the picture,” Ferbert said. “Uber has a larger share of the rideshare market, and that means more drivers, more miles driven and more affected workers.”

Rideshare Drivers United, whose members filed thousands of claims against Lyft and Uber, said the settlement falls short of the $434 million in claims it filed on behalf of about 1,900 Lyft drivers, per CalMatters. The Los Angeles-based group also questioned why drivers still have to fight for basic wages and expense reimbursement.

Meanwhile, Uber drivers filed a separate lawsuit this year alleging that the company failed to create a system allowing them to appeal deactivations from the platform. Rideshare drivers also formed a union this year after winning the right to collectively bargain in 2025.

Related: Appeals Court Upholds Prop. 22 Gig Worker Law, But It’s Still Likely Headed To State Supreme Court