Lyft has agreed to pay $272.5 million to settle California wage-and-hour claims that it misclassified drivers as independent contractors — the largest wage-and-hour settlement in the state’s history, according to the California Labor Commissioner’s Office.
The deal, announced on 1 October 2026 and still subject to San Francisco Superior Court approval, covers alleged violations from early April 2016 through 15 December 2020. Officials say 87% of the money — at least $237.075 million — is reserved for eligible drivers. Payments will be based on hours and miles driven in California in that period.
What the case alleged
The Labor Commissioner’s Office sued Lyft in Alameda County Superior Court in August 2020. It said drivers were denied protections that employees were owed under state law at the time, including minimum wages and overtime, rest-break premiums, reimbursement for business expenses, accurate wage statements, timely wage payments and paid sick leave.
Rideshare Drivers United helped drivers bring concerns to the Labor Commissioner and file wage claims through 2020. More than 1,600 drivers filed administrative wage claims. Those claimants will get extra money because the Labor Commissioner is redirecting its $5.45 million share of penalties to them, and a mileage multiplier that doubles the miles used to calculate their payments.
The Labor Commissioner’s case was later coordinated with actions by California Attorney General Rob Bonta and the city attorneys of Los Angeles, San Diego and San Francisco, plus private Private Attorneys General Act suits. The proceedings were coordinated in San Francisco Superior Court in September 2021.
Prop 22 and what the deal does not do
California voters passed Proposition 22 in November 2020, creating a separate classification framework for app-based drivers who meet set criteria. Because that framework took effect after the period covered by these claims, the settlement does not require Lyft to reclassify drivers going forward or pay for later work.
Lyft said it believes drivers have always been properly classified and is glad to put the case behind it. “If approved, this settlement closes a chapter from a very different time, before Prop 22,” the company said, adding that most California rideshare drivers have wanted to stay independent contractors and that voters affirmed that in 2020.
In a securities filing, Lyft said it can elect to pay over four years, with 5% simple interest after the first year up to a maximum of $12.4 million in interest, and that the agreement includes no admission of liability and no prospective operational commitments.
Official reaction
Labor Commissioner Lilia García-Brower said: “This settlement is about the workers who came forward and spoke up. Their voices made this outcome possible. We pursued this case to ensure workplace protections have real meaning and to recover as much as possible for drivers.”
Attorney General Bonta called misclassification a way companies “cheat workers,” not a business model. A third-party administrator will run the fund and contact eligible drivers once the court approves the deal and payments begin.