Lyft has agreed to pay $27 million to settle a
class action lawsuit brought by California drivers who claimed they
should be deemed employees instead of independent contractors, after a
U.S. judge rejected a previous $12.25 million deal as too small.
Lyft and larger rival Uber are attempting to
resolve lawsuits by drivers who contend they should be classified as
employees and therefore entitled to reimbursement for expenses,
including gasoline and vehicle maintenance. Drivers currently pay those
costs themselves.
A determination that these workers are
employees would affect the profits and valuations at so-called on-demand
technology companies.
U.S. District Judge Vince Chhabria had said
the previous Lyft deal "short-changed" drivers because it represented
only 9 percent of the potential value of drivers' reimbursement claims.
In the new deal, attorneys for drivers
calculated that Lyft drivers could have recovered $156 million had they
been classified as employees, based on a mileage reimbursement rate set
by the U.S. government and data provided by Lyft.
The $27 million settlement represents about 17
percent of that amount, which Chhabria cited as a target in rejecting
the previous deal.
Uber has agreed to settle a similar lawsuit
involving California and Massachusetts drivers. The potential damages in
that case was $852 million, more than the $732 million in commissions
Uber earned in those two states, according to court filings.
The Uber settlement, worth up to $100 million,
is about 12 percent of the potential damages. A separate U.S. judge is
expected to review that deal in June.
Shannon Liss-Riordan, an attorney for the
drivers, said Lyft drivers who worked a significant amount of time could
receive more than $10,000 under the deal. Drivers would remain
independent contractors under the settlement.
"We are proud to have reached this new
agreement, which will provide significant payments to Lyft drivers who
have put a lot of their time into this company," Liss-Riordan said.
In a statement, Lyft general counsel Kristin
Sverchek said the increased payment reflected the company's growth over
the past several months. The previous deal had been based on data from
earlier last year.
The settlement gives drivers the flexibility
"to control when, where and for how long they drive on the platform,"
Sverchek said.
A hearing on the Lyft deal is scheduled for June.
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