Lyft to pay $272.5 million to settle lawsuit over driver classification

Lyft has agreed to pay $272.5 million to settle a lawsuit over how the company classified its drivers, resolving a legal dispute that originated in 2020.

The case centered on the classification of gig-economy drivers as independent contractors rather than employees, an issue that was legally unresolved when the lawsuit was first filed.

A long-running dispute

Today, gig economy drivers for companies like Lyft are generally classified as contractors rather than employees, a framework that affects their access to benefits, minimum wage protections, and other employment rights. The settlement closes out a legal question that had lingered for several years as courts and regulators across different jurisdictions weighed in on the issue.

The size of the settlement, at $272.5 million, reflects the scale of the claims brought on behalf of drivers affected by the classification practices at issue in the case.

Driver classification has been a contentious legal and regulatory issue across the ride-hailing and gig-economy sector more broadly, with companies including other ride-hailing firms facing similar legal challenges over the years regarding how workers are categorized.

Specific terms of how the settlement funds will be distributed to affected drivers, and whether the agreement includes any changes to Lyft's current classification practices going forward, were not detailed in available reporting.