A $27.5 million class-action settlement in an independent contractor case against human cloud, ride-sharing firm Lyft received final approval Thursday. The deal affects more than 200,000 drivers in California.
The lawsuit filed by drivers in California argued misclassification as independent contractors by Lyft resulted in them losing out on reimbursements. In addition to the money, the settlement also makes other changes for drivers, including protections for drivers by allowing Lyft to terminate them only for specific reasons such as low passenger ratings, excessive cancellations or safety.
However, the drivers will remain independent contractors under the deal.
“We are pleased the court has taken the final step and approved the settlement agreement which will preserve the flexibility of drivers to choose when, where and for how long they drive with Lyft, and enable consumers to continue benefitting from convenient and affordable transportation,” Lyft said in a statement.
The settlement covers the more than 200,000 California drivers who gave at least one ride for Lyft between May 25, 2012, and July 1, 2016.
“We are very pleased to be at the end of this process,” plaintiffs’ attorney Shannon Liss-Riordan said in a statement to Staffing Industry Analysts. “The settlement provides substantial benefit to Lyft drivers — both monetary and non-monetary.”
The monetary part of the settlement will pay thousands of dollars to Lyft drivers who have logged the most miles, and comes to approximately $1 to $2 per hour for every hour most drivers have driven for Lyft and $2 to $4 per hour for full-time drivers, according to Liss-Riordan.
“The nonmonetary parts of the settlement will provide Lyft drivers with additional job security, a practical ability to challenge day-to-day grievances, and other benefits,” she said. “The question of whether the drivers are appropriately classified as employees or independent contractors must wait for another day.”
Judge Vince Chhabria gave preliminary approval the settlement in June 2016 after rejecting an earlier settlement effort for $12.25 million.
In approving the new settlement on Thursday, Chhabria struck language barring future claims.
“I think the settlement is a still victory for Lyft, even at the significantly higher dollar amount compared to the original settlement, as it allows Lyft to continue with their driver employment model largely unchanged,” said David Francis, research analyst at Staffing Industry Analysts. ‘However, the settlement still leaves the door open for future litigation, and the question of whether drivers for companies such as Lyft, Uber and their many imitators are truly employees or independent contractors remains unsettled for now, and will no doubt be debated again in the courts.”
The Lyft case was first filed in 2013, and other human cloud firms, most notably Uber, have faced similar suits. The lawsuit against Uber is still in federal court in Northern California.
In other independent contractor news:
A Washington state judge denied an effort by human cloud firm Uber to stop a Seattle law that gives independent contractor drivers the right to unionize, Fortune reports . However, a second lawsuit by the US Chamber of Commerce to stop the law is ongoing .