The settlement agreement, filed late on Tuesday in San Francisco
federal court, provides for Lyft to pay $12.25 million, as well as
give drivers notice if they are to be deactivated from the platform
and other benefits.
Lyft and larger rival Uber face separate lawsuits brought on behalf
of drivers who contend they are employees and entitled to
reimbursement for expenses including gas and vehicle maintenance.
The drivers currently pay those costs themselves.
The cases have been closely followed because a determination that
the workers are employees instead of contractors could affect the
valuations for other startups that rely on large networks of
individuals to provide rides, clean houses and other services.
While the deal will involve some costs for Lyft, classifying drivers
as employees would have been much more expensive and complicated,
said Jan Dawson, chief analyst of Jackdaw Research.
"It looks like Lyft got off fairly lightly here," Dawson said.
Shannon Liss-Riordan, an attorney for the drivers, acknowledged that
the settlement does not achieve a reclassification of drivers as
employees, but said the benefits are still significant.
Unlike a separate lawsuit against Uber, which has been certified as
a class action, Liss-Riordan said Lyft's arbitration agreement with
its drivers would have made it difficult for Lyft drivers to
similarly sue as a group.
Additionally, Liss-Riordan said her firm receives many more
complaints from Uber drivers about issues with their pay, and about
being deactivated from the platform.
"We have not been hearing so many concerns from Lyft drivers, which
leads us to believe that Lyft is treating its drivers with more
respect than Uber is treating its drivers," Liss-Riordan said.
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Uber representatives could not immediately be reached for comment.
Uber is scheduled for a June trial in San Francisco on whether its
drivers are employees or contractors.
As part of the settlement, Lyft has agreed that it can only
deactivate drivers for specific reasons, like low passenger ratings.
Drivers will be given an opportunity to address those issues before
they are deactivated, according to the court filing.
Lyft also agreed to pay the arbitration expenses for any driver who
wants to challenge their deactivation or disputes over compensation.
Lyft general counsel Kristin Sverchek said the company is pleased to
resolve the lawsuit on terms that "preserve the flexibility of
drivers to control when, where, and for how long they drive on the
platform".
U.S. District Judge Vince Chhabria would have to approve the deal. A
hearing on preliminary approval is currently scheduled for February
18 in San Francisco.
(Reporting by Dan Levine; Editing by Kenneth Maxwell and Miral
Fahmy)
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