Vince Chhabira gave final approval on Thursday to a $27 million settlement agreement in a class action lawsuit against Lyft brought about by its drivers.
U.S. District Judge Vince Chhabira gave final approval on Thursday to a $27 million settlement agreement in a class action lawsuit against the ridesharing company Lyft Inc. brought about by its drivers, approximately 700,000 nationally. The case, Cotter v. Lyft, was heard in federal court in the Northern District of California. The preliminary approval came in June of last year.
Chhabria originally rejected a settlement sum of half the final total, at $12.25, indicating it short-changed drivers. The lawsuit was filed in 2013. Uber, another well known riding sharing service who has more than 1.5 million drivers across the globe, is facing similar litigation in Massachusetts and California. A settlement was also rejected in the Uber case after a judge determined the amount wasn’t enough for drivers, and a much larger pay out is now expected.
Uber’s settlement could reach as much as $100 million, and drivers who worked more than about six months could receive more than $8,000 on average. Of the more than 163,000 class action plaintiffs covered in the Lyft case, fewer than 1,000 drove more than 30 hours per week in at least half of the weeks they drove, Lyft said in a statement.
Californian drivers had sued the company, arguing Lyft drivers should be classified as employees rather than contractors, and as such, be entitled to expense reimbursement, which includes charges for gasoline and vehicle maintenance. Drivers have historically incurred these expenses themselves. The payout will be based on how many hours per week they drove with Lyft. Drivers who logged the most miles are expected to receive thousands of dollars, while those who operated on less will receive smaller pay outs.
The Lyft settlement also called for drivers to receive more protections from getting booted from the company’s app, which is used to log drive time. “When we originally negotiated the settlement, we used data that Lyft provided us, which turned out to be very out-of-date by the time we got to the court to seek preliminary approval. The miles driven by Lyft drivers had basically doubled. So the judge sent us back to look again at the case with the updated data, and we were able to negotiate a settlement of more than twice as much as the original deal,” said Shannon Liss-Riordan, the drivers’ lawyer.
It has been determined that the company will be allowed to keep the drivers as independent contractors, while also continuing to allow drivers to have the flexibility of choosing when, where and for how long they drive with Lyft. Re-classifying would grossly affect Lyft’s profit margin. “The agreement is not perfect,” Chhabria said. “And the status of Lyft drivers under California law remains uncertain going forward.”
The final resolution does not help determine whether drivers for ridesharing companies should be considered independent contractors or employees, a status which entails certain protections under the law. However, Liss-Riodan stated she was still “very please to be at the end of this process” and a driver survey has shown that more than 80 percent prefer to remain independent contractors, anyway. “The question of whether the drivers are appropriately classified as employees or independent contractors will just have to wait for another day,” Liss-Riordan said.