A proposed $12.25 million class-action settlement between ride-sharing firm Lyft and its drivers to end an independent contractor misclassification lawsuit came under fire from the Teamsters union.
The union, which is not a plaintiff, argued in a court document filed March 15 that the settlement would allow Lyft to continue wrongfully classifying drivers as independent contractors to the detriment of the drivers.
“In exchange for modest payments to individual drivers, the settlement leaves, approves, and authorizes the ongoing and continuing violation of California and federal labor law, namely, the misclassification of drivers who are regularly engaged to drive Lyft’s customers, while seeking judicial approval of illegal waivers of drivers’ statutory rights,” according to the union filing.
It said the relief was inadequate and that the court should deny the settlement.
The union is trying to organize independent contractors, and at least one US jurisdiction — Seattle — has already allowed independent contractors to organize.
Lyft and the plaintiffs agreed to settle earlier this year. The deal would leave the drivers as independent contractors but make other changes, such as removing an “at-will” termination provision in the Lyft driver contract. The settlement would also provide payments to drivers. However, Judge Vince Chhabria raised questions, including whether the settlement is contrary to the original goal of the lawsuit, making the driver employees instead of independent contractors.
In responding to the judge’s question, plaintiffs’ attorneys wrote in a court filing that it is common for compromise to take place in wage and hour settlements with defendants making payments for past violations and only making some changes to their operations.
“Given the circumstances of this case, plaintiffs made a reasoned judgment (supported by their counsel’s more than a decade experience litigating such cases) that it would be preferable to accept this settlement, which would make some notable and important improvements to the working conditions of Lyft drivers, and some compensation on a classwide basis for the damages claimed in this case, than to face the risk that a class could not be certified or would be gutted given Lyft’s arbitration clause, as well as other risks of prevailing at trial and winning on appeal,” according to the filing.
Under the settlement, drivers would recover an average of $56.14 with very active drivers receiving more and others receiving less.
For its part, Lyft wrote in a filing that its drivers like being independent contractors. It cited a survey it conducted of drivers that found 82% agreed or strongly agreed they liked being an independent contractor. The company said the survey had more than 3,100 responses.
“Lyft sees no way it could offer any of these drivers — who work intermittently and only as they themselves see fit — the panoply of benefits reserved for employees without requiring them to make a more significant commitment to driving on the Lyft platform,” Lyft wrote in a filing. “Such a commitment likely would require giving up the ability to work with competitors, among other limitations that Lyft does not impose on the drivers. Unsurprisingly, Lyft drivers recognize the tradeoff reclassification would entail and thus most favor the status quo.”