Class Action Suit Brought by Lyft Drivers Granted Preliminary Approval by U.S. District Court Judge
What is happening in the class action suit brought by Lyft drivers?
Lyft is one of several competing ride-hailing taxi companies that pay freelance drivers from all over the country to ferry passengers to their destinations. As the company has grown larger and more successful, drivers have become increasingly dissatisfied with their earnings. Eventually, they filed a class-action lawsuit in an effort to increase their wages and be treated as actual “employees.”
In April, Lyft responded to the class-action suit with an initial settlement offer of $12.5 million. U.S. District Judge Vince Chhabria in San Francisco, however, rejected that settlement, stating that it “shortchanged” the drivers. Judge Chhabria has now granted preliminary approval to a $27 million settlement, thus moving the case closer to a settlement that favors the drivers. In his recent finding, the judge noted that the $27 million settlement “fixes the monetary flaws the court previously identified” and also addresses the need for further non-monetary benefits.
In any such business or corporate conflicts, it is essential for the business involved to engage the services of an experienced business attorney with the legal knowledge and business savvy to guide them through negotiations and, if necessary, litigations.
Benefits for Drivers
The preliminary legal decision provides several advantages to Lyft drivers. These include Lyft’s agreements to:
- Change its terms of service to warn drivers before they are deactivated
- Provide neutral arbitrators at Lyft’s expense to negotiate pay-related issues
- Allow California Lyft drivers to receive settlement benefits now rather than waiting years and risking a negative jury verdict
Benefits to Lyft
At the same time, although the decision appears to be in favor of the drivers, Lyft is also pleased with the results because, according to their spokeswoman Chelsea Wilson, “… the court has granted preliminary approval of the settlement,” maintaining the classification of drivers as independent contractors. This preliminary approval also means that the company will be able to:
- Avoid the expenses of a trial
- Continue operating without having to classify its driver as “employees”
- Avoids having to absorb costs for overtime pay, Social Security, & reimbursement for expenses
Lyft, a company based in San Francisco, is grateful that the preliminary settlement has not affected its $5.5 billion worth.
The recent court decision is only preliminary and does not definitively resolve whether Lyft drivers will, in the end, be defined as employees or independent contractors. This matter is open to further litigation.
While a final settlement is expected later in the year, class members will be notifyed in the near future of the preliminary approval, giving them the chance to object or opt out of the class action altogether.
Clearly, the idea of such litigation is trending. Uber Technologies, Lyft’s chief competitor, is in process of settling a similar lawsuit of $100 million. This lawsuit is presently before another U.S. district judge.
Of course not all employment litigation cases are as large or as much in the public eye as those of Lyft and Uber, but all employment litigations involve complex labor laws and high stakes for those involved. If your business is confronting such a case in California, you should contact a highly skilled employment litigation attorney to help ensure the best possible results for your company.
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