The ride-hailing service Lyft and its rival Uber agreed to settle a proposed class action lawsuit in California by giving drivers extra benefits, but without classifying them as employees.
Drivers of Lyft and of its rival Uber want to be recognized by the ride-hailing services as employees and to be given benefits accordingly to the status, such as receiving reimbursement for expenses including money for gas and for vehicle maintenance. Therefore, both companies are facing separate lawsuits for that type of claims. The lawsuit in California against Lyft alleged that, despite classifying its drivers as contractors, the company exerted the kind of pressure that is normally use to control the employees, such as having the right to deactivate the drivers from the platform without warning. The suit did not grant their claims to be reclassified as employees, but Lyft agreed to settle and pay 12.5 million dollars in compensations, giving its drivers extra benefits. While the deal involves important costs for Lyft, the company’s expenses would be far greater if the workers’ status changed from contractors to employees.
As part of the settlement, Lyft has agreed that it can only deactivate drivers for specific reasons, like low passenger ratings. Drivers who are at risk of deactivation will be given notice of this risk and an opportunity to cure the shortcoming before deactivation, according to the court filing. Lyft also agreed to pay the arbitration expenses for any driver who wants to challenge their deactivation or disputes over compensation. The 12.25 million dollars will be distributed among an estimated 100,000 drivers in California.