More than $237 million is designated for a fund that will compensate eligible drivers for work performed between April 2016 and December 2020. The settlement still requires court approval, and Lyft continues to deny wrongdoing. The case reflects a long-running legal dispute over employment classifications in the rideshare industry.
California Settlement Sets Aside More Than $237 Million for Drivers
California Attorney General Rob Bonta and the city attorneys of Los Angeles, San Diego and San Francisco pursued claims that Lyft improperly classified drivers as independent contractors. The allegations concerned wages below the minimum required by state law and the denial of employment protections.
According to Reuters, the $272.5 million agreement represents the largest settlement involving wage theft claims in California history, as identified by the state’s Labor Commissioner’s Office. The litigation was also combined with lawsuits filed on behalf of thousands of Lyft drivers.
The settlement allocates approximately $237 million to a third-party fund responsible for distributing compensation. Individual eligibility and payment amounts will depend on the hours worked and total miles driven between April 2016 and December 2020. Drivers will not immediately receive payments. Once the court approves the agreement and Lyft begins contributing to the fund, a third-party administrator will notify eligible drivers about submitting information for restitution.
Bonta described the agreement as a “landmark win for workers,” arguing that rideshare companies had benefited financially while drivers were denied compensation and legal protections. The attorney general also pointed to the demographics of the rideshare workforce. According to Lyft’s 2025 economic impact data cited by multiple reports, 80% of its Los Angeles drivers belonged to communities of color, while 47% identified as Latino.
Los Angeles City Attorney Hydee Feldstein Soto said worker misclassification deprived employees of protections and shifted financial responsibilities onto taxpayers. Lyft, meanwhile, maintains that its drivers were properly classified under applicable law. The company agreed to the settlement without admitting wrongdoing.
Years of Legal Disputes Over Driver Classification
The California litigation began in 2020, amid a broader disagreement over whether rideshare drivers should receive the same legal protections as employees.
Independent contractors generally do not qualify for employment benefits such as overtime, paid sick leave and minimum wage protections that apply to employees. This distinction has remained central to disputes involving Lyft, Uber and other app-based transportation companies.
According to The Guardian, Lyft and Uber supported Proposition 22, a California ballot measure designed to exempt rideshare drivers from the state’s employee classification requirements. Voters approved the measure in November 2020, while litigation over earlier alleged violations continued.
The dispute also extended beyond California. In 2023, Lyft and Uber jointly agreed to pay $328 million to resolve similar wage theft allegations brought by New York’s attorney general. A comparable California lawsuit against Uber remains ongoing.
During the period covered by the California allegations, Lyft reported approximately $9.5 billion in total revenue. Separately, figures compiled by ShiftTracker indicate that Lyft drivers in 2026 typically retain between $11 and $18 per hour after expenses.
For drivers covered by the California agreement, the next development will be judicial approval and the establishment of the compensation process. State officials have said further information about restitution procedures will be provided after the settlement moves forward.
