Will Lyft Class-Action Settlement Backfire for Drivers?

San Francisco, CAWhile the recent Lyft class-action settlement addresses certain California labor laws that will benefit its drivers, those drivers are still classified as independent contractors rather than employees.

The misclassification class action was first filed in 2013. Lyft driver Patrick Cotter claimed the company treated its drivers as employees rather than independent contractors, including taking 20 percent off their tips as an “administrative fee,” which is a violation of California labor laws.

On January 29, Lyft e-mailed its drivers saying that “no driver likes a price change...with recent price changes from the competition [Uber], we need to take action.”

Lyft spokesperson Paige Thelen told DNAinfo that “Lyft is the only ridesharing platform that offers tipping and the opportunity for drivers to earn back some of the commission we take through the Power Driver Bonus.” But is this what drivers want? When Uber announced price cuts, its drivers protested in Long Island City, with signs and chanting “Shame on Uber,” and “How Dare You?” The drivers complained that they will earn less with the price cuts, while still paying the same amount of commission to Uber.

Because drivers filed the lawsuit seeking to be classified as employees, this $12.25 million settlement is hardly a win. Instead, the driver terms and conditions will “more accurately reflect the independent contractor designation,” according to the New York Times.

Here are a few terms of the settlement:

• Lyft will concede its right to terminate drivers at will (Lyft has surrendered its at-will termination right, meaning that drivers will now be able to turn down rides without fear of their account being deactivated).
• Lyft will provide drivers with additional information on prospective riders such as their passenger ratings.
• Lyft will create a “favorite” driver option in which riders can designate their preferred drivers, and, as such, give them additional benefits.
• Lyft will pay the costs to arbitrate drivers’ grievances and implement a pre-arbitration process

Lyft drivers - like Uber drivers - who are not happy with the new “price changes,” might want to schedule an arbitration sooner than later: there may be a long lineup. Lyft has obviously crunched numbers and found it more beneficial to pay arbitrators than classify its drivers as employees, which would mean paying minimum wage and California overtime requirements. Sure, there are advantages to working in this “sharing economy,” such as freedom and flexibility. But who can afford the luxury of freedom when you can’t pay the rent?

While the Lyft settlement remains subject to court approval, other sharing economy businesses and independent contractors are likely wondering how and if it will affect them...