Skip to main content

Lyft settles lawsuit for $12.5M but drivers still aren’t ’employees’

Ride-hailing service Lyft this week agreed to pay $12.5 million in compensation and benefits to settle a lawsuit brought against it by its California-based drivers.

While the court judgment results in payouts of various amounts for the drivers depending on hours worked, it also means Lyft can continue to classify them as independent contractors rather than full-fledged employees.

Recommended Videos

Such a distinction is important for Lyft. A ruling demanding it treats its drivers as employees would’ve forced it to incur huge costs for things like Social Security, unemployment insurance, and workers’ compensation, as well as car-related expenses such as gas, insurance, and vehicle repairs.

However, it didn’t all go Lyft’s way. Besides the multi-million-dollar payout, the company has also agreed to a number of changes to its terms of service in order to clearly comply with existing state law. For example, it can no longer expel drivers from its service without warning, and must now take care of arbitration costs in employment-related disputes brought by drivers against the company.

Representing the Lyft drivers who brought the suit, attorney Shannon Liss-Riordan said that although the settlement fell short of its aim to reclassify the drivers as employees, it nevertheless achieved some “significant” changes that will benefit the drivers.

Lyft representative Kristin Riordan said in a statement, “We are pleased to have resolved this matter on terms that preserve the flexibility of drivers to control when, where and for how long they drive on the platform and enable consumers to continue benefiting from safe, affordable transportation.”

Uber, Lyft’s main rival in the ride-hailing space, will have been following Lyft’s case with great interest, as it too is facing similar court action from its own drivers, also in California. The case is currently making its way through the court system and will go before a jury on June 20.

The classification of drivers as independent contractors has been an important factor in the rapid growth of companies like Lyft and Uber, with the existing system enabling them to make big savings for subsequent investment. It’s also of great importance to the entire “sharing economy” model, which will likely suffer if legal challenges, such as the one currently facing Uber, go against it.

Please enable Javascript to view this content

Trevor Mogg
Contributing Editor
Not so many moons ago, Trevor moved from one tea-loving island nation that drives on the left (Britain) to another (Japan)…
You Asked: Nintendo Switch 2, Best Android Phones, and OLED Upgrades
You Asked Ep. 88: Switch 2, Android, & OLED

On today’s You Asked: What's up with the Nintendo Switch 2? We answer some of your burning questions as preorders are officially underway. In terms of mobile and phone tech, what Android comes most recommended by our Digital Trends expert, and is upgrading your OLED TV worth it for the latest anti-reflective coating?
Nintendo Switch 2 Questions with Giovanni Colantonio
A couple of weeks ago, we posted our first hands-on impressions of the Nintendo Switch 2. I got to attend the first-ever hands-on event for the console, played about 11 games, and now I’m here to answer your biggest questions.

Question from @kennethcheung4938: We haven’t seen much of the new OS yet—is it similar to the original Switch OS, or is it a full overhaul? If it’s the latter, will we still be able to play games from outside our native region? For example, if I have a U.S. Switch, can I buy physical game cartridges in Japan and still play them in English?

Read more
Huawei’s answer to the Moto Razr Ultra 2025 has me wondering who’s right
Huawei Pura X and Razr Ultra 2025 cover displays hero

If you’re looking to buy a clamshell folding phone, the latest options mostly follow the same design. There’s a large front display that functions like a small phone, unfolding to reveal a large screen with the same aspect ratio as the best smartphones.

The latest addition to the best flip phones comes from Motorola, with the new Razr Ultra 2025, the first true flagship flip phone complete with a large battery, fast charging, and an excellent Cover Display experience.

Read more
What is RTOS and is it the answer to Google’s Wear OS problems?
The OnePlus Watch 3 seen from the top.

Smartwatches are now over 25 years old, but just over a decade ago, Apple helped kickstart the current smartwatch industry with the launch of the original Apple Watch. From a focus on fitness to a selection of apps and whimsical watch faces, early smartwatches bore little resemblance to the current best smartwatches with which we’re now accustomed.

The only problem with the Apple Watch is that it was, and still is, exclusive to the iPhone. To answer this and capitalize on the demand for smartwatches from Android users, Google and its partners developed an Android-powered alternative. After many iterations, Wear OS was born, but it still faces several challenges many years later.

Read more