Lyft, drivers settle labor lawsuit with $12.25M payment, new work agreement
Lawyer who filed suit against Lyft still has class-action suit pending against Uber.
California drivers who sued Lyft in 2013 over whether they should be treated as employees or contractors have settled their closely watched lawsuit, court documents show.Possibly also of interest:
According to a Tuesday proposed settlement, which is likely to be finalized by the San Francisco federal judge overseeing the case next, Lyft will pay $12.25 million and will re-word its labor agreement with its workers, making it harder for the company to fire drivers at any time. The plaintiffs’ lawyers will take 30 percent of that amount; the remainder will be divided among California-based drivers and go toward covering court fees. The changes to the terms of service will be applied nationwide.
The settlement in Cotter v. Lyft has no immediate legal impact on other cases brought by the same plaintiffs' lawyer, Shannon Liss-Riordan, who has introduced a slew of similar labor suits against GrubHub, DoorDash, Caviar, and Uber.
In this case, the fundamental issue remains unsettled: drivers are still treated as contractors and still aren’t reimbursed for work-related costs like gas, insurance, and other expenses. Contractors are also not eligible for worker's compensation, unemployment, and other benefits. Liss-Riordan’s pending case against Lyft’s biggest rival, O’Connor v. Uber, aims to answer essentially the same questions.
In respective statements, both Lyft and Liss-Riordan applauded the settlement.
"We are pleased to have resolved this matter on terms that preserve the flexibility of drivers to control when, where, and for how long they drive on the platform and enable consumers to continue benefiting from safe, affordable transportation," Kristin Sverchek, Lyft’s general counsel, said in a statement sent to Ars.
Liss-Riordan called the settlement an "adequate resolution." She said that while this case doesn’t create a precedent of liability, it and others can be used to set the tone for the industry. "While the settlement does not achieve everything we had hoped for—namely a reclassification of the drivers as employees (as other sharing-economy companies have done recently, including Shyp, Instacart, Luxe Valet, Munchery, Eden, and most recently Honor)—it will result in some significant changes that will benefit the drivers," she wrote.
It ain't over yet
One labor law professor told Ars that this settlement still doesn’t resolve the fundamental question of whether startups can rely on this type of labor model....MORE
Meet the Lawyer Taking on Uber and the Rest Of the On-demand Economy
She's pretty good at this. In the FedEx case a couple years ago Liss-Riordan got the judge to totally reject FDX's argument: that the defendent
...manages a "sophisticated information and distribution network" but doesn't directly provide delivery services...FedEx settled for $228 million and had to give the newly classified employees a hearty "Welcome aboard".