I'm LongbridgeAI, I can summarize articles.Lyft stock slipped after agreeing to a record $272.5 million settlement with California authorities over driver wage claims. The deal resolves allegations of misclassifying drivers as independent contractors, denying them protections. Drivers will receive approximately $237 million, with payments spread over four years pending court approval. This follows similar settlements by Uber Eats and DoorDash regarding worker pay violations.
Shares in ride-hailing company Lyft (LYFT) reversed today after it reached a $272.5 million settlement agreement with California authorities over driver wage claims.The California Labor Commissioner's Office (LCO) said the record-breaking wage-and-hour settlement was the largest in the state's history.
Drivers Share $237 Million
Under the agreement, Lyft will pay $272.5 million, plus any accrued interest, to resolve allegations that it misclassified California drivers as independent contractors, denying them wage and workplace protections required under state law. Of the total settlement, 87% will go directly to drivers – roughly $237 million.
"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," said California Labor Commissioner Lilia García-Brower.
In recognition of their decision to come forward, more than 1,600 drivers who filed wage claims through LCO's administrative process will receive additional funds as a result of the LCO redirecting its share of the penalties – $5.45 million – payable to the state. Additionally, wage claimants will receive a multiplier that doubles the mileage used to calculate their payment.
The LCO filed a lawsuit against Lyft in Alameda County Superior Court in August 2020. The lawsuit alleged that Lyft treated drivers as independent contractors rather than as employees as required under state law at the time. As a result, the LCO alleged that drivers were denied minimum wages and overtime, rest-break premiums, reimbursement for business expenses, accurate wage statements, timely wage payments, paid sick leave and other protections. The settlement addresses alleged violations from April 6, 2016, through December 15, 2020.
Lyft Can Stagger Payments
The agreement remains subject to approval by the Superior Court of California, County of San Francisco. The settlement does not constitute an admission of fact or liability by Lyft. Under the agreement, Lyft may make the payments over four years.
Other companies employing drivers have also recently faced the wrath of state authorities including Uber Eats (UBER). In January, agreed to pay $3,150,000 to compensate 48,000 of its delivery workers.
The New York Department of Consumer and Worker Protection (DCWP) found that Uber Eats failed to pay these workers the minimum pay rate between December 2023 and September 2024 for time spent on trips that were ultimately canceled.
In September, DoorDash (DASH) reached a $131.5 million settlement with the New York government after it "screwed up" and underpaid its workers. The settlement with the New York City Department of Consumer and Worker Protection includes a $16.7 million fine, and more than $83 million to resolve a dispute over how to calculate pay for workers who were logged into the app and on-call but not actually making deliveries.
Is LYFT a Good Stock to Buy Now?
On TipRanks, LYFT has a Hold consensus based on 5 Buy, 22 Hold and 1 Sell ratings. Its highest price target is $30. LYFT stock's consensus price target is $19.02, implying a 27.07% upside. (See LYFT Stock Forecast).