California Secures Record $272.5 Million in Lyft Misclassification Suit

California Attorney General Rob Bonta, alongside city attorneys from San Francisco, San Diego, and Los Angeles, announced a $272.5 million settlement with rideshare company Lyft on October 1, 2026. The agreement resolves allegations that Lyft committed wage theft by misclassifying its drivers as independent contractors rather than employees between 2016 and 2020. The legal action was pursued alongside the California Labor Commissioner’s Office and a group of private plaintiffs.

Misclassification occurs when a company treats workers as independent contractors to avoid providing benefits and protections required for employees. Prosecutors alleged that this practice deprived workers of minimum wage, overtime, and reimbursement for work-related expenses under California labor laws and the state’s Unfair Competition Law.

The Legal Fight Over the ABC Test

The lawsuit began in 2020 following the adoption of the ABC test, a legal standard established by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court and later codified into law under AB5. Although Proposition 22 later altered how the ABC test is applied to certain app-based drivers, state and local prosecutors pursued the litigation through multiple legal challenges and appeals.

City attorneys from San Francisco, San Diego, and Los Angeles emphasized the joint effort required to counter worker exploitation and shift burdens onto taxpayers. Officials noted that the case highlights the ongoing scrutiny facing business models in the gig economy.

What This Means for Eligible Drivers

Subject to court approval, the $272.5 million will be paid in restitution and penalties. At least $237,075,000 of that total is specifically reserved for drivers who worked for Lyft during the relevant time frame.

Driver eligibility and compensation amounts will be calculated based on the number of hours and miles driven between April 5, 2016, and December 15, 2020. Once the court approves the settlement and Lyft funds the account, a third-party settlement administrator will handle the distribution.

Next Steps for Claimants

Eligible workers will be contacted directly by the third-party settlement administrator after payments begin. The administrator will set up a dedicated website, email address, and call center to answer questions for drivers seeking restitution, with the Attorney General’s Office providing further details soon.

If you have questions about employment rights or how wage and hour settlements work, consulting an employment lawyer may help clarify your legal standing and protect your interests.

This article is general information based on California Attorney General and court or agency records available at publication time. It is not legal advice; laws and deadlines differ by state and by case. Published October 2, 2026.