Lyft settles California driver misclassification case for $272.5 million

LYFT has agreed to pay $272.5 million to settle California's lawsuit alleging that it misclassified drivers as independent contractors rather than employees, state officials announced on Thursday. The deal still requires San Francisco Superior Court approval and resolves claims brought by Attorney General Rob Bonta's office and the city attorneys of San Francisco, Los Angeles and San Diego; Bonta called it the largest worker misclassification settlement in California history.

At least $237.075 million is set aside for drivers who worked for Lyft between April 5, 2016, and December 15, 2020, with payments based on hours and miles driven. The covered period ends when Proposition 22, approved by voters in 2020 and upheld by the California Supreme Court in 2024, took effect, so the deal addresses past conduct rather than how drivers are classified today. Lyft said it believes drivers have always been properly classified and is glad to put the case behind it.

Lyft's Form 8-K adds the financial terms. The $272.5 million total includes attorneys' fees, Lyft may pay over four years with 5% simple interest after the first year capped at $12.4 million, and the agreement has no prospective operational commitments and no admission of liability. Lyft had already recorded a $210 million accrual in the fourth quarter of 2025, so much of the cost was booked well before the announcement.

Next steps are court approval and the payment schedule Lyft elects. Uber (UBER), the other defendant, has not settled: KQED and TechCrunch report it is still fighting similar claims, and how that case ends could shape views of the sector's remaining legal overhang in California.