Uber and Misclassification Repercussions

Los Angeles, CAUnder the new Lyft settlement, drivers are still classified as independent contractors, which means they will not be entitled to California overtime pay.

Last month, attorney Todd Scherwin predicted that Lyft would likely have to increase its settlement proposal (after a judge rejected its offer of $12.25 million) and that Lyft drivers would be classified as independent contractors rather than employees. He was right.

Lyft drivers will get about 17 percent of the money they would have received if the judge recognized them as employees. If the judge approves this settlement, it will likely result in disgruntled drivers who might follow Uber’s latest litigation: its drivers are suing Uber for “all gratuities that were earned but stolen by Uber or were lost due to Defendents’ communications and policies.”


Uber said it has started an appeals process with drivers in California and Massachusetts, whereby the company will stop informing passengers that tips are included in the ride fare. Lyft passengers have an option to tip their drivers.

It is likely that attorneys will also continue to argue the misclassification issues with Uber, Lyft and other “shared economy” companies. Brian Mahany, attorney for Uber drivers in the class-action suit, told Forbes that “Uber micromanages drivers’ activities minute by minute which tells us they’re employees and the company can’t avoid employee rights and protections simply by calling drivers, ‘independent contractors.’”