Lyft agrees to $272 million settlement over California wage theft

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Lyft has agreed to pay $272.5 million to settle claims that it committed wage theft against California drivers in the six-year lawsuit the Golden State brought against the rideshare company.

California Attorney General Rob Bonta and the city attorneys of Los Angeles, San Diego and San Francisco sued Lyft in 2020 on allegations the company misclassified drivers as independent contractors between 2016 and 2020, meaning drivers were paid well below minimum wage and denied other workplace protections required under state law.

The majority of the money Lyft has agreed to pay, around $237 million, will be put in a third-party fund to be allocated to drivers. Drivers' eligibility and compensation will be based on the hours and total miles driven between April 2016 and December 2020.

Lyft has agreed to pay $272.5 million to settle claims that it committed wage theft against California drivers. (David Paul Morris/Bloomberg via Getty Images / Getty Images)

"We are proud to announce this landmark win for workers, the largest misclassification settlement in California’s history," Bonta said in a statement. "Rideshare companies like Lyft have enjoyed massive growth and profits on the backs of drivers over the past decade, many of whom are from immigrant communities and communities of color. Lyft’s success would not be possible without the drivers Lyft sought to unfairly short-change. Hard-working employees deserve full compensation for their labor."

"We have not and will not stand by when companies attempt to shirk their legal responsibilities and deprive employees of their wages and benefits as required under California law," he continued. "We will continue to fight to empower workers, combat unfair and deceptive practices, and ensure all Californians can thrive from the fruits of their labor."

The majority of the money Lyft has agreed to pay, around $237 million, will be put in a third-party fund to be allocated to drivers. (Photo by Spencer Platt/Getty Images / Getty Images)

The settlement still needs to be approved by the court.

Once the court approves the settlement and Lyft begins making payments to the settlement fund, eligible drivers will be notified through the third-party administrator about when they can send in their information for restitution.

"When companies misclassify their workers, they deny them critical protections and shift the burden onto taxpayers," Los Angeles City Attorney Hydee Feldstein Soto said in a statement. "This historic settlement sends a clear message: companies must follow the law, pay their fair share and play by the rules."

California Attorney General Rob Bonta and the city attorneys of Los Angeles, San Diego and San Francisco sued Lyft in 2020. (Sarah Reingewirtz/MediaNews Group/Los Angeles Daily News via Getty Images / Getty Images)

Despite Lyft agreeing to pay the settlement to bring an end to the lawsuit, the rideshare giant still maintains it did not engage in any wrongdoing.

FOX Business has reached out to Lyft for comment.

Between 2016 and 2020, Lyft reported a total revenue of $9.5 billion. Most Lyft drivers take home between $11 and $18 an hour after expenses, according to data compiled by ShiftTracker.

Lyft just wrote California a $272.5 million check for its own broken labor rules. That is a staggering number, and it should make people ask who actually caused this mess. The state sued Lyft over wage theft and driver misclassification, and rather than fight it out, the company folded. But the real story is that California spent years inventing an employment regime where a person with a car and an app cannot simply be a contractor anymore.

Drivers wanted flexibility. The state wanted benefits. Lyft wanted cheap growth. All three got a lousy outcome. The settlement does not fix the underlying contradiction, and it sure does not make anyone whole. It mostly lets politicians claim victory while the company quietly keeps operating the same way. That is not justice. That is a tax on doing business in a state that makes it illegal to be practical.

What makes this worth watching is the pattern. Gig companies get hammered in California, they pay massive settlements, and then the cost gets passed on to riders and drivers alike. No one gets clearer rules. No one gets a better job. The only winners are the attorneys and the politicos. We will say something else too: Lyft took the settlement to avoid a longer war. We would have preferred they fight it, because the premise of the lawsuit is that a side gig is a crime. That premise deserves a strong public challenge, not another nine-figure payoff.