In early October, California state and city authorities reached a landmark settlement with the rideshare company Lyft over the state’s allegations that the company misclassified its drivers as independent contractors instead of employees, denying them wages and benefits they would have otherwise been owed between 2016 and 2020. If a judge approves the settlement—involving the state attorney general, Rob Bonta, and attorneys for San Francisco, San Diego, and Los Angeles—the company will pay $272.5 million, the largest wage-and-hour-settlement in California history.
But the historic settlement also underscores the limits of the legal victory for gig workers. While Lyft is now poised to pay hundreds of millions of dollars over its past treatment of drivers, the company has since helped rewrite the very labor rules that are at the center of the dispute. In 2020, Lyft and other gig companies bankrolled Proposition 22, whose approval by voters allowed them to continue classifying drivers as independent contractors. The result is a settlement that compensates drivers for alleged past violations but does little to change the conditions under which they work today.
For drivers, it’s a bittersweet victory. “It’s a freaking absolute victory for drivers,” says Nicole Moore, president of Rideshare Drivers United. “This is a little bit of justice to get back what they stole from us.” But, she argued, the settlement should have come sooner, and the amount should be far higher.
Lyft, for its part, maintains that it has always classified its drivers appropriately. “If approved, this settlement closes a chapter from a very different time, before Prop 22,” George Flynn, a spokesperson, said in a statement. “Lyft believes drivers have always been properly classified under the law, and we’re glad to put this case behind us.”
‘Lyft really owes drivers $20 billion for those four years’
The settlement is the culmination of a years-long fight over how gig companies classify their workers. In 2018, California’s Supreme Court established a stricter test for determining whether workers could be treated as independent contractors, which the state subsequently codified in law.
Drivers by the thousands started filing wage claims with the state to try to vindicate their new rights; between Uber and Lyft, they ended up filing about 5,400 claims totaling the hours and miles they had spent driving, as well as all of the expenses they had paid to maintain their cars. They calculated that they were owed $1.3 billion in aggregate by the two companies. Just for Lyft, Moore says, the total they said they were owed was more than $434 million. In response, California and several city governments sued both companies in 2020 over their classification practices, setting the stage for the settlement reached this month.
Uber and Lyft didn’t change their business practices, however. Instead, they spent $100 million lobbying for Proposition 22, and it passed in November 2020. It has meant that drivers can’t submit any misclassification claims after 2020.
Moore isn’t sure how many drivers will be covered by the new Lyft settlement, but she estimates it could be 200,000. That means each individual driver stands to get far less than what they had demanded when they filed their wage claims. “Lyft really owes drivers $20 billion for those four years,” she tells Fast Company.
The settlement doesn’t impact Uber drivers. The state government’s lawsuit against Uber has a court date set for later next year, and a similar settlement could be reached before then.
In the meantime, drivers aren’t sitting idle. They’re still fighting the larger battle over whether they should be classified as independent contractors in the first place. In June, they filed a lawsuit claiming Uber has reneged on promises it made in Proposition 22, which they argue means the law should be invalidated and the state’s stricter labor laws be reinstated. “That absolutely continues on,” Moore says. If this lawsuit were to succeed, it would open the door for drivers to seek compensation for wage theft and misclassification from 2020 forward. “We have to weaken Prop 22 in order to be able to really compensate drivers fairly,” she adds.
The Lyft settlement, Moore vowed, is just one step in their quest to be paid fully. “The reason this is happening is because drivers kept this fight alive,” she says, “and we will continue to keep this fight alive.”
