Ride-hailing service Lyft is set to pay more than $12 million to settle a case brought by drivers in California who say that they were inappropriately classified by the company as independent contractors rather than employees.
As part of a proposed settlement in the class-action case, which still needs to be approved by the court, Lyft agreed to pay $12.25 million to certain drivers.
“While the settlement does not achieve everything we had hoped for — namely a reclassification of the drivers as employees ... it will result in some significant changes that will benefit the drivers,” said Shannon Liss-Riordan and Matthew Carlson, two of the lawyers who represented the drivers, in a statement.
Lyft will no longer be able to terminate drivers’ relationship with the company “at will, for any reason, and instead will only be able to deactivate Drivers for specific, delineated reasons or after providing notice and an opportunity to cure,” according to the settlement proposal. The company also agreed to pay for certain fees associated with arbitration between drivers and the company.
The company will provide drivers with more information about potential passengers, such as their rating on the platform and the time it will take to reach their location, while the driver is deciding whether to accept or deny the user’s request for a ride.
“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 benefitting from safe, affordable transportation,” said Kristin Sverchek, Lyft’s general counsel, in a statement.
Details of the proposed settlement, which still needs to be approved by the court, were filed on Tuesday.
A similar case brought by Liss-Riordan against Lyft’s larger rival Uber will continue, and the lawyer said in her statement that attorneys felt that differences in the way the two companies handled “arbitration agreements” in their contracts with drivers meant that it would have been harder to get the courts to allow the drivers in the case to pursue damages.
“Unlike the case against Uber, where the court held Uber's arbitration clause to be unenforceable, and therefore certified the case as a class action, we did not have the same arguments to make regarding Lyft's arbitration clause and recognize that, because of it, it would be very difficult if not impossible, to pursue this case on a class basis as we are doing in the Uber case,” she and Carlson said in the statement.
Arguments in the Uber case are scheduled to begin in June.
The cases are part of a larger debate over how workers are treated in the “on-demand economy,” where startups of various sizes offer consumers services at the tap of a smartphone screen. Critics worry that it is creating a new class of workers who won’t have the same social safety net provided to traditional employees.
Sen. Mark WarnerMark WarnerDems worry too much about upsetting others. That needs to stop. Washington-area lawmakers request GAO report on DC Metro Trump's pick for intel chief to get hearing next week MORE (D-Va.) has called for legislation to address the issue, but has said he hopes the companies can first be given some regulatory leeway to experiment with their own ideas for how to provide benefits.