Get All Access for $5/mo

Lyft Agrees to Revised $27 Million Deal in Driver Lawsuit In the new deal, attorneys for drivers calculated that Lyft drivers could have recovered $156 million had they been classified as employees.

By Reuters

This story originally appeared on Reuters

Reuters | Stephen Lam

Lyft has agreed to pay $27 million to settle a class action lawsuit brought by California drivers who claimed they should be deemed employees instead of independent contractors, after a U.S. judge rejected a previous $12.25 million deal as too small.

Lyft and larger rival Uber are attempting to resolve lawsuits by drivers who contend they should be classified as employees and therefore entitled to reimbursement for expenses, including gasoline and vehicle maintenance. Drivers currently pay those costs themselves.

A determination that these workers are employees would affect the profits and valuations at so-called on-demand technology companies.

U.S. District Judge Vince Chhabria had said the previous Lyft deal "short-changed" drivers because it represented only 9 percent of the potential value of drivers' reimbursement claims.

In the new deal, attorneys for drivers calculated that Lyft drivers could have recovered $156 million had they been classified as employees, based on a mileage reimbursement rate set by the U.S. government and data provided by Lyft.

The $27 million settlement represents about 17 percent of that amount, which Chhabria cited as a target in rejecting the previous deal.

Uber has agreed to settle a similar lawsuit involving California and Massachusetts drivers. The potential damages in that case was $852 million, more than the $732 million in commissions Uber earned in those two states, according to court filings.

The Uber settlement, worth up to $100 million, is about 12 percent of the potential damages. A separate U.S. judge is expected to review that deal in June.

One group of drivers has objected to the Uber deal, calling it unfair. Mark Geragos, a prominent Los Angeles attorney, formally entered the case on their behalf on Wednesday.

Drivers "deserve representation by lawyers willing to fight for them and take this case to trial to uphold the basic principles of employee rights," they wrote in a court filing.

Shannon Liss-Riordan, the attorney who has represented drivers in both the Uber and Lyft cases, has praised the settlements for providing immediate benefits to drivers. Liss-Riordan said Lyft drivers who worked a significant amount of time could receive more than $10,000 under the deal, and full-time Uber drivers could get several thousand dollars as well.

Drivers would remain independent contractors under both deals, but Liss-Riordan said the cases faced significant risks going forward and drivers could end up with nothing.

"We are proud to have reached this new agreement, which will provide significant payments to Lyft drivers who have put a lot of their time into this company," Liss-Riordan said.

In a statement, Lyft general counsel Kristin Sverchek said the increased payment reflected the company's growth over the past several months and maintains driver flexibility. The previous deal had been based on data from earlier last year.

A hearing on the Lyft deal is scheduled for June.

(Reporting by Dan Levine; Editing by James Dalgleish, Andrew Hay and Bernard Orr)

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Branding

ChatGPT is Becoming More Human-Like. Here's How The Tool is Getting Smarter at Replicating Your Voice, Brand and Personality.

AI can be instrumental in building your brand and boosting awareness, but the right approach is critical. A custom GPT delivers tailored collateral based on your ethos, personality and unique positioning factors.

Growing a Business

He Immigrated to the U.S. and Got a Job at McDonald's — Then His Aversion to Being 'Too Comfortable' Led to a Fast-Growing Company That's Hard to Miss

Voyo Popovic launched his moving and storage company in 2018 — and he's been innovating in the industry ever since.

Business News

Is the AI Industry Consolidating? Hugging Face CEO Says More AI Entrepreneurs Are Looking to Be Acquired

Clément Delangue, the CEO of Hugging Face, a $4.5 billion startup, says he gets at least 10 acquisition requests a week and it's "increased quite a lot."

Business News

You Can Now Apply to Renew Your U.S. Passport Online — But There's a Catch

The U.S. State Department officially launched the beta program this week.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

Apple Reportedly Isn't Paying OpenAI to Use ChatGPT in iPhones

The next big iPhone update brings ChatGPT directly to Apple devices.