Daily News

View All News

Judge in Lyft case questions $12.25 million settlement

February 17, 2016

A federal judge raised questions over a proposed $12.25 million settlement between ride-sharing service Lyft and drivers, who had claimed the company misclassified them as independent contractors. The proposed settlement makes changes in the drivers’ contract but would still leave them as independent contractors.

Judge Vince Chhabria on Feb. 11 asked the parties if this aspect of the settlement agreement is contrary to the original goal of the lawsuit, and if there is case law discussing whether a court may approve a settlement agreement that might be deemed contrary to the original goal of the lawsuit.

The judge also asked if there are other companies in the “so-called ‘sharing economy’” that classify their workers as employees, and if so, are there any factors specific to Lyft’s business model that preclude it from classifying drivers as employees, or from providing drivers with some of the protections employees receive under California law.

Other information requested pertained to the practical impact of the settlement’s removing the “at-will termination” provision of the driver agreement and replacing it with a provision permitting Lyft to deactivate drivers only for specific reasons — such as poor ratings from customers, safety concerns, or too many ride cancelations — as well as the evidence that Lyft previously terminated people for reasons other than those for which Lyft will be permitted to terminate them under the new language.

The plaintiffs’ supplemental brief is due Feb. 25; Lyft’s is due March 3. Judge Chhabria continued the hearing on the plaintiffs’ motion for preliminary approval of their proposed settlement agreement with Lyft to March 10.