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Lyft Settles Lawsuit for $12.25 Million

The new wording of the Lyft driver agreement will make it harder for the company to fire its drivers anywhere in the country, but does not classify the drivers as employees.

by / January 27, 2016
In January, Lyft unveiled its "glowstache," which will soon replace the fuzzy, pink mustache on the front grill of drivers' vehicles. The banana-sized glowstache will attach to the dashboard with magnets, and glows at night. Lyft

Lyft has settled its recent lawsuit around its drivers' employment status for $12.25 million, and has changed its terms, according to a proposed settlement released Jan. 26. Thirty percent of the payout will go to the plaintiffs' lawyers and the rest will go to Lyft's California-based drivers.

“We are pleased to have resolved this matter on terms that preserve the flexibility of drivers to control when, where and for how long they drive on the platform,” said Kristin Sverchek, general counsel at Lyft, in a statement.

The new wording of the Lyft driver agreement will make it harder for the company to fire its drivers anywhere in the country, but does not classify the drivers as employees.

The plaintiffs' lawyer, Shannon Liss-Riordan, said in a statement that while it wasn't a complete victory, it was "adequate."

"While the settlement does not achieve everything we had hoped for — namely a reclassification of the drivers as employees [as other sharing-economy companies have done recently, including Shyp, Instacart, Luxe Valet, Munchery, Eden, and most recently Honor] — it will result in some significant changes that will benefit the drivers."

The issue of establishing drivers of companies like Lyft and Uber as full-time employees remains unsettled, and Liss-Riordan still holds similar lawsuits against GrubHub, DoorDash, Caviar and Uber.

This settlement is not expected to serve as a precedent for future cases, but according to an Ars Technica report, may serve as a warning to other companies in the sharing economy that if they try anything new, there's a lawyer somewhere ready to take them on.