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Lyft Is Willing to Pay $27 Million to Keep Its California Drivers as Contractors

Image: AP
Image: AP

Lyft has offered to settle a case against its California drivers for a sum of $27 million. The money would allow the company to keep its drivers as contractors, rather than making them employees.


The case is based on the fact that if Lyft were an actual employer, it would be expected to provide employees with basics like holiday pay and a minimum wage. As it is, the ride-hailing company treats its drivers as contractors, which means it doesn’t need to provide any such support.

The case has been brought by California drivers in an attempt to become reclassified as employees. In January, Lyft offered to pay up $12 million to settle the case out of court, which was deemed too little by a federal judge. Now, the company has upped its offer to $27 million.


Shannon Liss-Riordan, the lawyer acting on Lyft’s behalf, told the Wall Street Journal that the sum would provide Lyft drivers who’d worked for six months with “more than $6,000.” This new settlement offer will still have to be approved by a California judge.

Uber is currently in the process of trying to settle similar cases in California and Massachusetts. It’s offered to pony up $84 million, but recent reports suggest that the settlement could save it as much as $750 million compared to reclassifying its drivers as employees.


Contributing Editor at Gizmodo. An ex-engineer writing about science and technology.

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Should they be allowed? The concept of employee vs contractor is supposed to be fairly defined and good labour laws should essentially restrict the use of contractors AS employees. In the case of these services they are becoming predominantly full time occupations and not ride sharing, this is something both companies have effectively promoted. In the case of people genuinely ride sharing they ARE contractors, but for those people working full time for Uber, Lyft etc. they are working AS employees.

If these companies don’t want to have employees then they need to enforce rules to restrict the number of hours drivers can work for example so it maintains itself as riding sharing and not an international cab company with an app.

Also even if they settle what about the people going forward, the companies haven’t changed their practices so will they be giving automatic payouts to new drivers once they reach certain conditions?