The ride-hailing company Lyft will pay $272.5 million to settle a California wage-and-hour lawsuit, marking the largest such settlement in the state's history.

The settlement will resolve allegations that Lyft misclassified its workers as independent contractors between 2016 and 2020 and denied them wage and workplace protections that were required under state law at the time.

Eighty-seven percent of the total settlement will go directly to drivers.

"Lyft believes drivers have always been properly classified under the law, and we're glad to put this case behind us," the company said in a statement. "We remain laser focused on helping create more earnings for drivers and more affordable rides for riders."

In 2020, California passed Proposition 22, which allows Lyft and Uber drivers to be classified as contractors.

The California Labor Commissioner's Office filed suit in 2020 in Alameda County Superior Court, alleging that Lyft was not providing to its workers minimum wages and overtime, rest-break premiums, reimbursement for business expenses, accurate wage statements, timely wage payments and sick leave.

"If approved, this settlement closes a chapter from a very different time, before Prop 22," Lyft said. "The vast majority of rideshare drivers in California have always wanted to be independent contractors, and voters affirmed that when they passed Prop 22 in 2020."

The association Rideshare Drivers United helped drivers file wage claims against San Francisco-based Lyft through 2020, according to the Labor Commissioner's Office.

After being filed, the lawsuit became part of a coordinated proceeding with actions brought by the California Attorney General and the City Attorneys of Los Angeles, San Diego and San Francisco. The cases were coordinated in San Francisco Superior Court in September 2021.

"This settlement is about the workers who came forward and spoke up," California Labor Commissioner Lilia García-Brower said in a statement. "We pursued this case to ensure workplace protections have real meaning and to recover as much as possible for drivers."

The settlement comes less than a month after Uber and Lyft drivers in California secured collective bargaining power for the first time with the certification of the California Gig Workers Union.

The passage of Assembly Bill 1340 last year gave gig ride-hailing drivers the right to unionize and collectively bargain.

The California Public Employment Relations Board officially recognized the union in September after it secured support from 30% of active drivers in the state in August.

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