Lyft more than doubles settlement offer with drivers

Lyft has more than doubled the value of its settlement with drivers who sued over their worker status after a federal judge rejected the original amount.

Lyft and the drivers in the case filed a document on Wednesday detailing the new proposed $27 million settlement. The updated deal, reached after a mediation session, also includes changes to the way some drivers will be compensated.

{mosads}It must still be approved by a U.S. District Court judge who is presiding over the class-action lawsuit in Northern California.

“In light of Lyft’s continued growth, we agreed to update the resolution in a way that both increased monies paid to drivers and helped preserve their flexibility to control when, where and for how long they drive on the platform,” said Kristin Sverchek, Lyft’s general counsel, in a statement.

The drivers allege that they have been inappropriately classified by Lyft as independent contractors rather than employees entitled to broader benefits and legal protections. The settlement does not change their status, though it does include a promise by the company to change internal practices related to how it treats drivers.

An earlier settlement proposal would have paid drivers $12.25 million. But the federal judge in the case rejected the deal in early April because, he said, it didn’t compensate drivers fairly for their expenses.

Cases filed by drivers against Lyft and rival Uber have been closely watched in the debate over independent contractors at companies in the on-demand economy. The case against Lyft was filed in fall 2013.

Some companies have reclassified their workers, saying it allows them to better train them. But Lyft and Uber have insisted that designating their drivers as employees would not be fair.

Uber recently moved to settle the lawsuit filed by its drivers. That proposal would pay drivers up to $100 million and allows for the creation of drivers associations to represent their interests with the company, among other provisions.