Most notably, the non-traditional taxi services Uber and Lyft have faced legal challenges from disgruntled members of their driver fleet. Now it likes like the San Francisco-based Lyft Inc. may have averted a class-action pile-up that could have seriously damaged the company’s business model, by settling the case.
Recently, Lyft tentatively agreed (pending final approval by the judge) to pay $12.25 million to settle all claims brought by drivers who felt they had been misclassified as 1099 contractors instead of W-2 employees. If approved, the deal would retain contractor status for the drivers but offer them some new benefits in exchange.
Chiefly, it would require Lyft to notify drivers in advance when the firm is planning to de-activate them from its ride-booking platform; and would afford them the opportunity to contest the decision. Some legal experts feel the Lyft outcome offers a creative solution to a growing problem in the on-demand marketplace. The compromise may also influence a similar pending class-action suit for Lyft’s chief rival Uber Technologies Inc.