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Lyft agrees to largest-ever California wage settlement over driver pay

Lyft agrees to largest-ever California wage settlement over driver pay

Money Moves San Francisco, CA local

$272.5 million deal would settle claims Lyft misclassified drivers before Prop 22

October 1st, 2026: Settlement announced publicly

Overview

Updated Oct 20

Lyft agreed on September 30 to pay $272.5 million to settle claims it misclassified California drivers as independent contractors, the largest wage-and-hour settlement in the state's history. The deal is not final: as of October 18, Judge Ethan P. Schulman of San Francisco Superior Court had not signed the judgment that starts the payment clock.

The terms give Lyft four years to pay, with $120 million due in the first year. The state Labor Commissioner is sending its $5.45 million share of penalties to the more than 1,600 drivers who filed wage claims, and those drivers get double credit for miles driven. Proposition 22 took effect after the claims period, so Lyft does not have to reclassify drivers going forward.

Why it matters

The settlement sets a benchmark for gig-economy misclassification costs and raises the stakes for Uber's still-pending case.

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Key Indicators

$272.5M
Total settlement amount
Largest wage-and-hour settlement in California history, covering April 2016 through December 2020.
87%
Share of settlement going to drivers
The remainder covers attorneys' fees, costs, and expenses.
$210M
Lyft's Q4 2025 accrual for the case
Lyft recorded the charge in the fourth quarter of 2025, before the settlement was reached.
$30M
First payment after judgment
Due within 14 days of the court entering the stipulated judgment; $120 million total falls in year one.
$5.45M
Penalties redirected to wage claimants
The Labor Commissioner gave up its share of penalties so drivers who filed claims get extra, plus double mileage credit.

Voices

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People Involved

David Chiu
David Chiu
San Francisco City Attorney
Helped negotiate the settlement
 Rob Bonta
Rob Bonta
California Attorney General
Helped negotiate the settlement
GF
George Flynn
Lyft spokesperson
Defended the settlement on behalf of Lyft
 Ethan P. Schulman
Ethan P. Schulman
Judge, San Francisco Superior Court
Has not yet signed the Lyft settlement judgment

Organizations Involved

Lyft
Lyft
Rideshare company
Agreed to pay $272.5 million; the settlement needs a judge's signature

Lyft is a San Francisco-based rideshare company that connects passengers with drivers through its app.
California Labor Commissioner's Office
California Labor Commissioner's Office
State agency
Filed the original lawsuit, helped negotiate the settlement, and redirected its penalty share to drivers

The California Labor Commissioner's Office enforces state labor laws, including minimum wage, overtime, and worker classification rules.
Rideshare Drivers United
Rideshare Drivers United
Driver advocacy group
Pushed for the wage claim campaign that prompted state action

Rideshare Drivers United is a driver-led advocacy group that organized wage claims against Uber and Lyft.

Timeline

August 2020 October 2026

10 events Latest: October 1st, 2026 · 1 month ago
Tap a bar to jump to that date

  1. Settlement announced publicly

    Latest Statement

    State officials announce the largest wage-and-hour settlement in California history.

  2. Lyft reaches $272.5M settlement

    Legal

    Lyft agrees to pay $272.5 million to settle California driver misclassification claims.

  3. Lyft records $210M accrual

    Financial

    Lyft records $210 million accrual for the pending case in Q4 2025.

  4. Stay lifted, discovery begins

    Legal

    Stay lifts after arbitration fight; parties begin discovery in wage theft case.

  5. California Supreme Court upholds Prop 22

    Legal

    State's highest court upholds Prop 22 in Castellanos v. State of California.

  6. Court of Appeal upholds Prop 22

    Legal

    Appellate court upholds Proposition 22's classification framework for app-based drivers.

  7. Cases consolidated in San Francisco

    Legal

    Lyft and Uber wage theft cases consolidated in San Francisco Superior Court.

  8. Claims period ends

    Legal

    End of the period covered by the settlement; Prop 22 framework takes effect.

  9. Proposition 22 passes

    Election

    California voters approve Prop 22, classifying app-based drivers as independent contractors.

  10. Labor Commissioner files wage theft lawsuit

    Legal

    California Labor Commissioner files suit against Lyft in Alameda County, alleging driver misclassification.

Scenarios

1

Court Approves Lyft Settlement

Likely Resolves by Q2 2027

Discussed by: Settlement parties, including the California Labor Commissioner and San Francisco City Attorney, negotiated the terms and expect approval.

The San Francisco Superior Court holds a fairness hearing and grants final approval. Lyft begins paying into the settlement fund over four years, with 5% simple interest accruing after the first year. Eligible drivers are contacted by a third-party settlement administrator.

2

Court Rejects or Modifies Settlement

Unlikely Resolves by Q2 2027

Discussed by: No major publication has predicted rejection; courts typically approve settlements negotiated by state agencies.

The court finds the settlement insufficient or the notice process flawed, sending parties back to negotiate. This would delay payments and could change the amount. Lyft's $210 million accrual might need adjustment.

3

Uber Reaches Similar Settlement

Possible Resolves by End of 2027

Discussed by: Rideshare Drivers United has publicly pushed for Uber to settle; the Labor Commissioner's office anticipates trial in 2026 if no deal is reached.

Uber, facing the same claims and the Lyft precedent, negotiates its own settlement in the coordinated case. The amount could be larger given Uber's larger California driver base. A trial would follow if no deal emerges.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

April 2018

Dynamex Operations West v. Superior Court (2018)

The California Supreme Court adopted the ABC test for determining whether workers are employees or independent contractors. The test requires companies to prove workers are free from control, perform work outside the company's core business, and operate independently.

Then

The ruling upended gig-economy business models in California and led directly to Assembly Bill 5 in 2019.

Now

AB5 codified the ABC test, and the Lyft and Uber lawsuits followed when the companies continued classifying drivers as independent contractors.

Why this matters now

The Dynamex ABC test is the legal standard the state used to argue Lyft misclassified its drivers.

December 2000

Microsoft 'permatemps' settlement (2000)

Microsoft agreed to pay $97 million to settle claims it misclassified long-term temporary workers as independent contractors, denying them stock options and benefits. The case involved thousands of workers who had worked for Microsoft for years as 'permatemps.'

Then

Microsoft paid the settlement and changed its contractor practices.

Now

The case became a landmark example of the financial risk of misclassification, cited in later gig-economy litigation.

Why this matters now

It showed that misclassification settlements can run into the hundreds of millions, setting expectations for the Lyft case.

Sources

(11)
+5
Mission Local KTVU FOX 2 California Department of Industrial Relations Yahoo Finance Rideshare Drivers United California Department of Justice Lyft, Inc. Investor Relations Settlement Insight AP News Fast Company California Department of Industrial Relations