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Lyft Settles Employee Misclassification Lawsuit

Last year, we wrote about two class action lawsuits on behalf of Uber and Lyft drivers who were classified as independent contractors. The drivers, who filed suit in 2013, claimed that the mobile application transportation companies improperly classified them in order to avoid wage and hour laws. Opinions issued by the federal courts in March 2015 represented a temporary win for the drivers–allowing their lawsuits to go forward despite the companies’ attempts to have them thrown out.

This week, at least one of the lawsuits has come to an end. The parties in the Lyft lawsuit settled the case for $12.25 million to be paid to the drivers.  Reports Small Business Trends:

Although the settlement does not meet all the demands brought to court by drivers through their lawyer, Shannon Liss-Riordan, she said it “will result in some significant changes that will benefit drivers.”

As part of the Lyft employee misclassification lawsuit settlement, Lyft agreed to change its terms of service so that its treatment of drivers complies with existing laws governing independent contractors in the State of California.

Under Lyft’s new terms of service, drivers can no longer be terminated for any reason without prior warning. Their termination has to be for a specific reason that is stipulated in the new agreement. Also, drivers must first be notified and given the opportunity to fix the problem.

Additionally, if drivers feel they have been poorly paid, they will be able to take up pay-related disputes before a neutral arbitrator at Lyft’s expense.

Based on reports, it does not appear that Lyft’s drivers will be reclassified, and it does not appear that the primary issue in the case–whether the drivers are improperly classified as independent contractors instead of employees, was resolved. Similarly, the Uber lawsuit, filed by the same plaintiffs’ counsel, continues.
“In the litigation we are pursuing against Uber, we hear daily complaints from drivers about how they feel Uber has mistreated them … cutting fares without their input, shortchanging them on pay they are owed, and deactivating them for no reason or no legitimate reason,” explained Liss-Riordan.

The outcome of the trial in the Uber case, if it indeed goes to trial, will provide guidance in a fast-changing area of law.

Employers, looking to cut costs and be competitive, are continuing to find ways to classify workers as independent contractors, which makes the workers exempt from overtime and minimum wage compensation rates. However, the law is very strict on who can be classified as such.

Madia Law regularly represents workers not properly classified as independent contractors who should instead be considered employees under the law who are entitled to overtime and minimum wage. Likewise, we regularly represent workers improperly classified as salaried individuals who should instead be classified as hourly. If you feel you’re being taken advantage of, contact us today.