Lyft reaches $272 million California driver misclassification settlement
The rideshare company resolved allegations covering the period from April 2016 through December 2020.
Key takeaways
- Lyft, Inc. (LYFT) reached a $272.5 million settlement with the State of California and other plaintiffs to resolve driver misclassification allegations covering April 2016 through December 2020. The company can pay over four years with 5% simple interest after the first year.
Lyft, Inc. (LYFT) reached an agreement to resolve allegations that the company misclassified drivers in California as independent contractors, according to a regulatory filing on Tuesday.
The settlement totals $272.5 million, inclusive of attorneys fees, costs, and expenses. The agreement covers the period from April 5, 2016 through December 20, 2020.
The settlement is subject to approval by the Superior Court of California, County of San Francisco. Plaintiffs include the State of California, represented by the California Attorney General and the City Attorneys of San Francisco, Los Angeles, and San Diego, the Labor Commissioner for the State of California, and two private plaintiffs suing under the Private Attorneys General Act.
Under the terms, Lyft can elect to make settlement payments over four years. Simple interest of 5% will accrue after the first year, subject to a maximum amount of $12.4 million in interest. The agreement does not include prepayment penalties or prospective operational commitments.
The agreement does not constitute evidence or admission of fact or liability by the company. In the fourth quarter of 2025, the company recorded a $210 million accrual related to this matter within accrued and other current liabilities on its condensed consolidated balance sheet and recognized a corresponding charge on its statement of operations.
The company said resolving the matter with certainty now will allow it to avoid the costs and distraction of protracted litigation and enable management to maintain its focus on executing business objectives. The settlement also reduces meaningful legal uncertainty and risk associated with complex litigation.
As of September 30, 2026, the company confirmed there have been no changes to its third quarter 2026 Gross Bookings, Adjusted EBITDA, and Adjusted EBITDA margin guidance provided on August 6, 2026. The company expects to report third quarter 2026 financial results in November 2026.