California’s attorney general and city attorneys have struck a $272.5 million settlement with ride-sharing giant Lyft, resolving claims that the company misclassified drivers as independent contractors, potentially denying them critical worker protections and fair pay.

The lawsuit, filed in 2020, alleged that Lyft evaded state wage laws by exploiting drivers, particularly those from immigrant and minority communities, who have been central to the app’s growth and success over the past decade.

“This historic settlement sends a clear message to companies that they must follow the law, pay their fair share, and play by the rules,” said Los Angeles City Attorney Hydee Feldstein Soto, echoing the sentiment of the broader legal community.

The settlement highlights the ongoing scrutiny faced by rideshare companies, which have been criticised for underpaying and mistreating drivers. California’s Assembly Bill 5 (AB5) was pivotal, providing a legal framework to challenge such misclassification practices.

While Uber remains under legal scrutiny, this landmark deal with Lyft marks a significant victory for workers’ rights, underscoring the growing recognition of the importance of fair treatment in the gig economy.