A $12.25 million settlement proposed by the ride-sharing app company Lyft was rejected by a federal judge Thursday, following a lawsuit filed by California drivers. The lawsuit argues they are employees, whom are entitled to reimbursement and mileage expenses.
U.S. District Judge Vince Chhabria wrote on the court document, stating the settlement was "short-changed" and the given amount "does not fall within the range of reasonableness," Reuters cited. The plaintiff's representing lawyers estimated that the value of reimbursement is at $64 million, and later agreed to $12.25 million settlement.
However, the judge said the figure could be as high as $126 million after a further calculation based on updated data from Lyft. In January 2013, the ride-sharing app company agreed to resolve the lawsuit filed by drivers in California, sought to classify them as employees, with a legal right to have reimbursement and mileage expenses.
A spokesman for Lyft issued a statement, saying, "We believe we reached a fair agreement with the plaintiffs and are currently evaluating our next steps," Wall Street Journal quoted. The said settlement would have prevent Lyft from making changes and would have only required the company to pay and agree to inform drivers on termination and notice in danger to be pulled out.
The vice president for Teamsters, Rome Aloise, said they are glad with the ruling. Shannon Liss-Riordan, an attorney at law firm Lichten & Liss-Riordan representing the plaintiffs, also said they hoped the settlement can be improved. Lyft's giant rival, Uber is also sued by California drivers in a separate misclassification lawsuit, according to Wired. The court trial is scheduled for late June.
The San Francisco-base ride-sharing app company is one of the several on-demand technology companies fighting legal battles with its workers, who claim they are incorrectly classified as independent contractors. A determination that workers are employees would affect the profits and valuations of these startups.
