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Cautionary Tale Episode 116
Lifts Cost Lyft
$272.5M for Misclassified Drivers
In November 2020, California voters approved Proposition 22, creating a special independent contractor classification for qualified app-based drivers. Previously, rideshare companies had been classifying their drivers as independent contractors under then-existing law.
However, in August 2020, the California Labor Commissioner’s Office had sued Lyft in several counties claiming its drivers were employees. Those cases were consolidated with private lawsuits filed under the Private Attorney Generals Act (PAGA). Claims included non-payment meal and rest break premiums, minimum wage and overtime, business expenses and paid sick leave, non-compliant wage statements and more.
The October 1, 2026 settlementannounced covers more than four years through December 15, 2020 (Prop 22's effective date was December 17), requiring Lyft to pay $272.5 million plus interest. Some 1,600 drivers will split 87 percent, $237,075,000.
California Labor Commissioner Lilia García-Brower stated:
"This settlement is about the workers who came forward and spoke up. Their voices made this outcome possible. We pursued this case to ensure workplace protections have real meaning and to recover as much as possible for drivers. My office will forgo its share of the settlement so that every available dollar goes directly to drivers who filed wage claims. I'm grateful to the courageous workers who came forward to assert their rights and to the dedicated advocates who stood with them throughout the process."
California independent contractor law is very specific about who qualifies. See Mistaking Identity: Misclassifying Workers as Independent Contractors Gets Employers in Hot Water (April 10, 2026). Employers need to know that law and apply it in making worker classification decisions.
TAKE-AWAYS:
Employers must classify workers correctly according to law, not preference, and steer clear of illegal independent contractor classifications.
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
See also:
Helena Kobrin
October 9, 2026
If you are an employer facing possible litigation, or have an employee issue on which you need immediate guidance, call us to set up a consultation, or submit your message.
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