On Thursday, a federal judge declared the ruling in the case of more than 200,000 former and present employees and the transportation network company Lyft. Drivers of the company wanted to defend some of their rights, even though they have a special status of independent contractor. Even though the two parties are still bounded by a contract, there is a difference from employees. Lyft drivers are free to work when requested. However, this much freedom doesn’t mean that the employer can discharge them whenever it pleases. The court discussed this very glitch in the system.
Lyft Has to Pay Drivers $27 Million in Damages
On Thursday, a federal judge announced a settlement between Lyft drivers and Lyft itself. The ruling was against the company in this class-action lawsuit. Thus, Lyft has to settle for a total amount of $27 million. According to the decision, drivers get to keep their status as an independent contractor. On the other hand, the ride-hailing company cannot terminate employment whenever as it happened before.
From now on, Lyft will have to respect certain moral and business aspects regarding its relationship with drivers. Whenever there are talks about a separation, the company has to be mindful about proceedings. Thus, the company will not be able to renounce an independent contractor anymore without a specific, valid, and true reason. Moreover, it has to respect a period of notice before terminating the contract. This way, workers have time to declare and discuss their concerns regarding the reason behind this decision. An independent contractor cannot benefit certain features such as overtime compensation, minimum wage, health insurance, unemployment, workers’ compensation, lower taxes, and proof of employment.
The Lawsuit Questioned the Independent Contractor Status
It was the year of 2013 when Lyft driver Patrick Cotter filed a lawsuit against his company. The suit first started as a class-action one for the entire nation. Afterward, it became just a legal action on behalf of Californian drivers only. The allegations questioned the status of workers. Their official quality was of that of independent contractors, but their work performance resembled more of that of an employee.
Lyft drivers are responsible for their taxes. Moreover, their employer didn’t cover the necessities to do their jobs such as insurance, gas, and others. On the other hand, the company did take 20% of drivers’ tips that was justified as an administrative fee. This stipulation was in violation of California labor laws. Even though the ruling forces Lyft to cover financial damages for drivers and to stop firing workers with no apparent reason, it still doesn’t classify the status of such employees under California law.
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