Lyft will pay $272.5 million to settle claims that it misclassified California drivers as independent contractors between April 2016 and December 2020, Attorney General Rob Bonta announced Thursday in San Francisco. Drivers will receive at least $237 million — the largest misclassification recovery in state history, Bonta said.

San Francisco, San Diego and Los Angeles joined the state Labor Commissioner and two individual drivers in the consolidated case before San Francisco Superior Court. The litigation ran six years. Lyft, Uber and other gig companies later spent $205 million on Proposition 22, the 2020 ballot measure that 58% of California voters approved to keep treating them as contractors.

"Make no mistake, misclassification is how companies cheat workers," Bonta said at the press conference. "That's not a business model, that's exploitation."

What does the settlement require?

The deal entitles thousands of Lyft drivers to back pay for minimum wage, overtime and work-related expenses they would have earned as employees under California law. A court-appointed administrator will distribute funds based on the miles and hours each driver logged for Lyft between April 2016 and December 2020.

More than 1,600 drivers filed wage claims with the Labor Commissioner, whose chief, Lilia García-Brower, said her office is forgoing its $5.45 million share "so that every available dollar goes directly to drivers who filed wage claims." The settlement covers any eligible Lyft driver; the total claimant count is not yet known.

How does this compare to what drivers sought?

Rideshare Drivers United, the Los Angeles-based group that filed 5,000 initial claims, said the $272.5 million falls short of the $434 million it sought for roughly 1,900 Lyft drivers. Group president Nicole Moore asked: "Why do they not have to pay basic minimum wages and expenses like every other company? Are we OK with letting these companies cheat a system of the most basic labor rights?"

Lyft told the Securities and Exchange Commission it may spread payments over four years. The company framed the deal as closing a pre-Prop. 22 era.

"This settlement closes a chapter from a very different time, before Prop. 22," Lyft spokesperson George Flynn said.

What happens next with Uber?

San Diego City Attorney Heather Ferbert signaled the Lyft deal is not the end of state enforcement. "Lyft is only part of the picture," she said. "Uber has a larger share of the rideshare market, and that means more drivers, more miles driven and more affected workers. So our job is not done."

Ferbert told CalMatters the case against Uber could go to trial if the company declines a "meaningful" settlement. Uber did not return a request for comment. Bonta called Uber "a major violator" on misclassification. The state and cities pursued both companies in parallel, and the U.S. Supreme Court and California Supreme Court each declined to review the underlying misclassification fight.

What does Prop. 22 enforcement look like now?

CalMatters reported earlier this year that no single agency enforces the wage guarantees, healthcare stipends or deactivation-appeal rights Prop. 22 promised. Uber drivers sued the company this year over its appeal process. Drivers also formed a collective-bargaining unit after winning union rights last year.

Driver Yasha Timenovich, who works six or seven days a week across Amazon, DoorDash, Grubhub, Roadie, Spark, Lyft and the recently added Veho, expects to receive a Lyft payment and eventual Uber compensation. "Since we waited six years for this lawsuit, what's another year?" he said.

San Francisco Superior Court must approve the settlement before the administrator contacts drivers and Lyft begins funding the account.