Ride-hailing company Lyft will pay $27 million to settle a class-action lawsuit brought by drivers who sought to be classified as employees, after a judge gave the agreement final approval Thursday.
Though the settlement results in payment to drivers and some changes to Lyft’s terms of service for drivers, it does not decide the question of whether drivers are employees or independent contractors.
That matter “will have to wait for another day,” said plaintiff attorney Shannon Liss-Riordan.
The settlement approved by U.S. District Judge Vince Chhabria in San Francisco covers drivers who worked for Lyft in California between May 25, 2012, and July 1, 2016. Drivers who have driven the most will receive the biggest payments.
A similar class-action lawsuit brought by drivers against Lyft rival Uber Technologies Inc. is still ongoing. Liss-Riordan is also the plaintiffs’ attorney in that case.
About 95,000 Lyft drivers have already submitted claims to be part of the settlement, and new claims are still being accepted, she said.
As part of the settlement, Lyft agreed to give drivers warnings before they are deactivated on the app and allow them to take pay-related issues before a third-party arbitrator at Lyft’s expense.
“We are very pleased to be at the end of this process,” Liss-Riordan said in a statement. “The settlement provides substantial benefit to Lyft drivers — both monetary and non-monetary.”
The settlement helps Lyft by averting a costly trial and allowing the company to keep operating without having to classify its drivers as employees, which would qualify them for benefits.
The San Francisco firm said in a statement that it was “pleased the court has taken the final step and approved the settlement agreement which will preserve the flexibility of drivers to choose when, where and for how long they drive with Lyft.”
Last April, Judge Chhabria rejected an initial settlement offer of $12.5 million, saying the amount “shortchanged” drivers. The current settlement agreement received preliminary approval last summer.
Though some have criticized the settlement amount as too little, Liss-Riordan said she thought it was an “excellent” settlement, especially for the pool of people who have driven the most miles for Lyft. The alternative, she said, could have been more uncertain.
Companies have increasingly tried to use arbitration clauses to prevent class-action lawsuits, she said, and the U.S. Supreme Court is set to take up the issue next term. It is widely believed justices are split on the question, meaning the new ninth judge could cast the tie-breaking vote, she said.
“The question about whether or not the drivers are properly classified as employees or independent contractors … getting an answer to that question would take a very long time, (and) would not be assured because it would have gone to a jury that may or may not have agreed with us,” she said.