It looks as though Lyft Inc., the San Francisco-based ride-hailing company, has put the brakes on a class action lawsuit that had the potential to seriously damage its business model. In a proposed settlement agreement announced Wednesday, the company will pay $12.25 million to resolve all claims in Cotter v. Lyft, a class action lawsuit in which Lyft drivers claimed the company misclassified them as 1099 independent contractors, when they really should have been W2 employees.
The settlement, still subject to approval by U.S. District Judge Vince Chhabria in San Francisco, would keep Lyft drivers independent contractors but give them some new benefits. Lyft would be required to give drivers advance notice if it deactivates them from its ride-booking platform and provide an explanation for the deactivation. The agreement would also allow drivers to challenge Lyft’s decision to drop them, as well as address any compensation-related complaints through arbitration proceedings paid for by Lyft.
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