Lyft to pay $272.5 million to settle California driver wage-theft claims, the largest in state history

California's wage-theft enforcers just got their biggest check ever from the gig economy: Lyft will pay $272.5 million to settle claims from the state and three of its largest cities that it kept drivers classified as contractors to hold down labor costs, Reuters reported Thursday.

A record wage-theft settlement

The first suit landed in 2021, filed by the state of California; Los Angeles, San Francisco and San Diego filed their own, and all four were later folded into lawsuits brought on behalf of thousands of Lyft drivers. A judge still has to sign off on the $272.5 million deal, which reaches back to alleged violations from April 2016 through the end of 2020.

California sued Lyft in 2021, as did Los Angeles, San Francisco and San Diego; the cases were merged with lawsuits brought on behalf of thousands of Lyft drivers. The settlement, subject to court approval, covers alleged violations between April 2016 and December 2020.

California's Labor Commissioner says it is the largest wage-theft settlement in the state's history.

'We're glad to put this case behind us'

Lyft's statement, as Reuters relayed it, maintained that drivers 'have always been properly classified under the law' and said the company is 'glad to put this case behind us.' The settlement ends the cases without the company conceding the classification question that started them.

A decade of classification fights

The fight over how gig workers are classified is more than a decade old for Lyft, Uber and other app-based platforms, Reuters noted. The economics are the point: contractors are not owed minimum wage, overtime, and other protections under federal and state laws.

California's fight with Lyft specifically goes back further. In 2017, a federal judge gave final approval to a $27 million settlement in the Cotter class action covering some 95,000 California drivers -- a deal that, as Bloomberg Law reported at the time, left the question of whether drivers should be classified as employees unresolved.

And the California deal is not the first of its scale. A 2023 deal saw Lyft and Uber pay $328 million together to resolve similar claims from New York's attorney general, Reuters reported.

What has to happen next

A court must still approve the settlement before any money changes hands. Until that happens, how the $272.5 million is divided among the state, the three cities and the driver plaintiffs -- and on what timeline -- remains to be settled.