Lyft Settles Lawsuit for $12.5 Million

Lyft, the ride-share service known by it’s unmistakable pink mustache, settled a lawsuit by agreeing to pay $12.5 million in benefits and compensation to California-based drivers – without reclassifying them as employees.

While the suit, which aimed to force Lyft to reclassify drivers as employees rather than independent contractors in order to grant them workplace protection, fell somewhat short of it’s goal to , it did secure several significant changes.

Lyft will no longer be able to remove drivers from the platform without warning or valid reason and must give drivers the chance to rectify the problems before being ultimately shut out.

In addition, the company must pay arbitration expenses for drivers or deactivations.

The entire sharing economy has watched the situation with great interest, most notably Lyft rival Uber – whom is facing similar legal action.

Still, the terms of the settlement protect Lyft’s business model.  In not classifying drivers as workers, Lyft avoids expenses such as vehicle maintenance, gas, tax, the minimum wage, among other employment issues.

Lyft general counsel Kristin Sverchek offered a statement on behalf of the company:

“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 and enable consumers to continue benefiting from safe, affordable transportation.”

Uber is due to appear at trial in San Francisco later in the year.

More Lawsuit information.