Rideshare Company Lyft Agrees to $272.5 Million Settlement Over Driver Misclassification

Lyft will pay $272.5 million to settle allegations by state and local prosecutors that it misclassified drivers as independent contractors rather than employees between 2016 and 2020, denying them protections including overtime pay and expense reimbursement. The settlement, filed by the California Attorney General and city attorneys from San Diego, Los Angeles, and San Francisco, allocates approximately $237 million for driver restitution based on hours and miles worked during the disputed period. Eligible drivers are expected to be contacted by a settlement administrator, with millions of dollars anticipated for local San Diego drivers.

The settlement resolves a legal challenge spanning several years of operations at the rideshare platform. Prosecutors alleged that Lyft's classification structure prevented drivers from accessing standard employment benefits and protections, including overtime compensation, minimum wage guarantees, and reimbursement for work expenses incurred while performing their duties.

The resolution process will examine driver activity during a specific four-year window. Compensation determinations will account for individual driving patterns, measured by both time spent working and distance traveled. A designated administrator will manage outreach to affected workers and handle inquiries through multiple communication channels.