Lyft, the US-based transportation network firm, has agreed to pay a settlement of $27 million in an effort to end the lawsuit filed by California drivers. The transport network company has increased its settlement payout this time as the federal jury rejected its earlier proposal of $12.25 million clearance.
In January, the company tried to resolve a case filed by its ex-drivers who charged Lyft for misterming them as independent contractors instead of regular workers. According to the current proposal, median casual drivers would obtain about $131 while median regular drivers, whose average driving capacity amounts to 700 hours, would avail nearly $2,000, FORTUNE said quoting court records.
The company made this new settlement agreement following calculations, which showed that Lyft would be owed to pay $126 million as settlement charge to its California drivers if they were regular workers instead of contractors. However, the drivers continue to remain contractors as part of the new settlement agreement.
The company noted that its drivers would receive nearly all the extra money. Kristin Sverchek, general counsel of the company, said that the increased settlement proposal would benefit drivers and also help to preserve their tractability with regard to the time, place and duration of the journey on the platform.
Similarly, Uber Technologies last month accepted to pay $100 million as settlement charges to drivers of the two class-action cases. As part of that settlement agreement that awaits for jury's approval, Uber has accepted to alter its approach to neutralising drivers from their work without giving any warning but said it will not reclassify drivers as workers, as reported by THE WALL STREET JOURNAL.
Uber drivers who drove for nearly six months on their platform would avail a median damage amount of $8,000, according to plaintiffs' advocate Shannon Liss-Riordan. Meanwhile, divers of Lyft with six months driving at Lyft platform would obtain over $6,000 if the judge approves the deals, Shannon's estimation showed.
According to Reuters, Lyft's $27 million settlement deal represents 17% of the potential rate of drivers' clearance claims. While, Uber's settlement represents nearly 12% of the possible damages that amounted to $852 million in the states of Massachusetts and California.
Meanwhile, a team of drivers has challenged the Uber agreement, saying the deal is prejudiced. On Wednesday, a significant advocate in Los Angeles Mark Geragos formally filed a lawsuit on their behalf. The court filing read as drivers "deserve representation by lawyers willing to fight for them and take this case to trial to uphold the basic principles of employee rights."
A court trial for the Lyft deal will take place on June. Lawyers believe this settlement would benefit both the company and drivers.
