Lyft has agreed to pay $272.5 million to resolve California claims that it misclassified drivers as independent contractors and denied them wages and workplace protections available to employees, in what state officials say is the largest wage-and-hour settlement in California history.
The agreement, announced Thursday, October 1, 2026, covers drivers who worked for Lyft from April 2016 through December 15, 2020. The claims were brought by the California Labor Commissioner, Attorney General Rob Bonta, the city attorneys of Los Angeles, San Francisco and San Diego, and private plaintiffs.
About 87% of the settlement will go directly to drivers, according to the California Labor Commissioner’s Office. Payments will be based on miles driven while picking up and transporting passengers during the covered period. More than 1,600 drivers who separately filed wage claims will receive additional compensation, including $5.45 million in penalties that otherwise could have gone to the state.
California accused Lyft of classifying drivers as independent contractors when state law required them to be treated as employees during the period covered by the litigation. Officials say the classification allowed Lyft to avoid obligations including minimum wage, overtime, rest-break premiums, reimbursement for business expenses, paid sick leave and timely wage payments.
The Labor Commissioner sued Lyft in Alameda County Superior Court in August 2020. The case was later coordinated in San Francisco Superior Court with an enforcement action involving the attorney general and the three city attorneys, along with claims brought by drivers under California’s Private Attorneys General Act.
Lyft does not admit wrongdoing under the settlement and maintains that its drivers were properly classified. The company said resolving the litigation would eliminate the expense and uncertainty of continuing the case.
The agreement does not require Lyft to reclassify drivers who currently use its platform in California.
California voters approved Proposition 22 in November 2020, creating a separate framework that allows qualifying app-based transportation and delivery drivers to remain independent contractors while receiving certain benefits and protections. The measure took effect December 16, 2020, one day after the period covered by the settlement.
The California Supreme Court upheld Proposition 22 in 2024, preserving the classification framework for qualifying app-based drivers. Lyft may pay the $272.5 million settlement over four years, with 5% simple interest beginning after the first year and total interest capped at $12.4 million.
The settlement remains subject to approval by the San Francisco Superior Court.
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