Judge rejects settlement in Lyft driver status case

A federal judge in California has rejected a settlement that would have ended a class-action case over the status of workers at ride-hail firm Lyft.

Judge Vince Chhabria in the Northern District of California said the settlement “shortchanged” drivers when it came to reimbursing certain expenses and that other aspects of the agreement fell short as well.

{mosads}The case in question began when drivers sued the company, saying they had been wrongly branded contractors rather than employees, which denies them certain benefits in many cases.

Lyft reached an agreement in January with the drivers that required them to pay $12.25 million to certain drivers and make other changes to their terms of service. Some drivers and the Teamsters union, which has been working to organize drivers for ride-hailing applications, objected to the settlement.

Chhabria said in his Thursday ruling that the $12.25 figure for reiumbursement was too low. He said that though lawyers had estimated the reimbursement claim to total $64 million, it was actually more than $126 million.

“The drivers were therefore shortchanged by half on their reimbursement claim alone,” he said.

But he also took issue with the argument, made by the individuals who objected, that a baseline settlement should include reclassifying the drivers as employees.

“The Teamsters’ position is based largely on policy arguments better made to the legislative and executive branches,” he said. “And it disregards the risks the drivers would face if they took their case to trial.”

Chhabria said that “if the parties wish to negotiate a new agreement that addresses the defects identified in this ruling, the Court would, at least on the current record, preliminarily approve that agreement even if it fell short of requiring Lyft to classify its drivers as employees.”

A similar case brought by some of the same lawyers is working its way through the courts over worker policies at Uber, Lyft’s primary rival and the dominant player in the ride-hailing market. Lawyers have said they believe they have a better chance of winning the case outright than they did in the Lyft case because of differences in the agreements drivers made with Uber and Lyft.