Lyft Pays $272 Million to Settle, But Uber Still Stuck in California Lawsuit

The tally runs from April 5, 2016 to December 15, 2020, covering the period when Lyft drivers were allegedly underpaid minimum wage and benefits. California Attorney General Rob Bonta announced Thursday that Lyft has agreed to pay $272.5 million to resolve the state's labor classification lawsuit filed against Uber and Lyft back in May 2020. According to the statement, at least $237.075 million of that sum will go directly toward compensating drivers, with eligibility and amounts calculated based on hours driven and mileage.

The lawsuit traces back to Assembly Bill 5, passed in 2019, which wrote the "ABC test" into California law to determine whether a worker should be classified as an employee or an independent contractor. Under AB5's original terms, Uber and Lyft drivers would have been classified as employees entitled to protections like minimum wage. This struck directly at both platforms' business models, prompting Uber and Lyft to jointly back Proposition 22 in November 2020—a ballot measure carving out gig platforms from the ABC test, reclassifying drivers as contractors while offering them some benefits, such as healthcare subsidies, in exchange.

Workers have since repeatedly challenged Prop 22's legality, but California's Supreme Court upheld the law in 2024. In other words, the $272.5 million Lyft is paying out settles the state's retroactive claims covering the period before Prop 22 took effect—it's a historical account being closed, and doesn't affect the classification system currently operating under Prop 22.

The settlement still requires court approval before it's finalized. Uber, the other defendant in the lawsuit, has yet to reach a settlement on its end.