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Lyft Pays $27M to Settle Driver Classification Suit

Accepted submission by -- OriginalOwner_ at 2017-03-18 07:40:09 from the still-not-employees dept.
Career & Education

CNET reports []

The showdown between ride-hailing service Lyft and its California drivers appears to have come to an end.

US District Judge Vince Chhabria gave final approval on [March 16] to a $27 million settlement agreement for a class-action lawsuit between Lyft and more than 200,000 of its former and current California drivers, according to court filings [].[PDF]

This settlement seems to conclude the battle over how the ride-hailing company classifies its drivers. Under the agreement, the drivers will remain independent contractors, rather than be converted to employees.

El Reg continues []

The drivers sued [] Lyft in 2013 arguing that they should be classified as employees rather than independent contractors--the same issue that has dogged rival Uber in courts around the country.

By classifying drivers as independent contractors, Lyft and Uber shift the expense of payroll taxes, overtime, and worker benefits to drivers. With lower operating costs and venture funding, they are able to offer transportation at a price that's often below what taxi companies can afford to charge.

The settlement provides drivers with greater protection against being removed from the Lyft platform. Lyft has agreed to alter its Terms of Service so that it can no longer deactivate driver accounts for any reason. Instead, it will enumerate specific infractions that may lead to termination.

It will also pay for driver arbitration costs in the event of a dispute, and implement a pre-arbitration process to resolve issues without entering into a more formal process.

What's more, the settlement calls for creating a way for passengers to "favorite" a driver, resulting in benefits of some sort. And Lyft has agreed to provide more passenger data to drivers before they have accepted ride requests.

[...]In April last year, [Judge Chhabria] of San Francisco rejected a proposed $12M settlement on the grounds that drivers might win more than 10 times that amount were a jury to determine Lyft's drivers should be designated employees.

In accepting the revised offer, Chhabria acknowledges [...] "the [imperfect] agreement falls within a range of reasonable outcomes, given the benefits it achieves for drivers and the risks involved in taking the case to trial".

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