Ride-hailing company Lyft has agreed to a $272.5 million settlement, including fees and costs, to resolve claims that it misclassified California drivers as independent contractors rather than employees.
The agreement covers claims from the state attorney general, city attorneys, the labor commissioner, and private plaintiffs for the period spanning from April 5, 2016, through December 15, 2020. At least $237,075,000 of the total is reserved for drivers, distributed based on hours and miles driven, with payments permitted over four years alongside up to $12.4 million in interest. Lyft previously booked a $210 million accrual in the fourth quarter of 2025.
The underlying litigation followed the introduction of the legal "ABC test," which was adopted by the California Supreme Court in 2018 in Dynamex Operations West, Inc. v. Superior Court and later codified under AB5. Although Proposition 22 subsequently altered how the ABC test is applied to certain app-based drivers during the litigation, the attorney general and partner agencies maintained their legal challenges.
California Labor Commissioner Lilia García-Brower stated that the outcome was made possible by the workers who came forward and spoke up.
According to an SEC filing dated September 30, Lyft stated that the settlement does not constitute an admission of liability. The company noted that resolving the matter allows it to avoid the costs and distraction of prolonged litigation while keeping management focused on business goals. The agreement remains subject to court approval.
