California’s attorney general and three city attorneys announced a $272.5 million settlement with Lyft after allegations that the company “committed wage theft by misclassifying drivers as independent contractors rather than employees” between 2016 and 2020, according to a Thursday statement. The case dates back to May 2020, when then-Attorney General Xavier Becerra, who is now the Democratic candidate for governor, sued both Uber and Lyft. That lawsuit said the ridehailing companies evaded state law when they declared that their drivers were not employees.
Thursday’s settlement affects only Lyft, while the case against Uber continues. This historic settlement sends a clear message: Companies must follow the law, pay their fair share, and play by the rules.” Ever since these rideshare companies began in the early 2010s, they have been scrutinized for underpaying and mistreating drivers. The specific state law that California used to challenge the companies is known as Assembly Bill 5 (AB5), which enshrined a three-part test to determine if someone is properly classified as an independent contractor or an employee.
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