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Lyft Offers to Settle New York Driver Classification Disputes

Jan. 9, 2020, 8:52 PM

Lyft Inc. has offered to pay New York ride-share drivers about $100 to $600 each to settle a lawsuit alleging the company misclassified them as contractors instead of employees, but the deal would require the drivers to keep quiet about it.

Lawyers for a class of some 8,000 drivers are already advising them not to accept the proposed settlement, according to documents obtained by Bloomberg Law that detail the offer. Lyft’s offer is “too low,” would allow the company to boot drivers off the platform, and would force drivers to sign confidentiality and nondisparagement agreements, the lawyers say.

“We believe that your offer is not a fair amount to resolve all of your claims against Lyft and should be rejected,” attorneys Marc Held and Philip Hines told drivers in four email notices obtained by Bloomberg Law.

Lyft driver Saif Chaudry sued the company in 2017, seeking to represent as many as 20,000 drivers who were allegedly misclassified as independent contractors. His lawyers said at the time that the drivers were seeking more than $5 million in unpaid wages, expenses and other money damages.

The dispute is one of several ongoing legal challenges to Lyft’s treatment of drivers as self-employed entrepreneurs, which spares the company from having to pay overtime, workers’ compensation, and other workplace benefits.

Lyft, along with rideshare competitor Uber Technologies Inc., and food delivery services DoorDash and Postmates, is leading a ballot initiative to shield digital platform services from a new California law that makes it harder to treat workers as contractors rather than employees. Lyft and others are also gearing up for a fight over similar legislation in New York.

The total monetary value of the settlement offer was not immediately clear. A Lyft representative declined to comment on the offer. Held and Hines also declined a request for comment.

Lyft and other gig-economy companies that connect service providers to customers through online platforms have long argued that they are middlemen, not employers. Some courts, along with federal labor and employment agencies, have agreed, citing the flexibility the companies give drivers to work when and where they want.

The settlement offer would require drivers “to sign a confidentiality agreement whereby you can’t tell anyone (even your wife or family) what you resolved the case for,” Held and Hines told drivers in the notices. The deal also “requires you not disparage Lyft for any reason (regardless of whether it’s true or for good reasons) at any time or you would be required to return the full settlement amount,” they said.

Arbitration Ahead?

Chaudry alleged in the original lawsuit that Lyft violated state laws by tagging him as an independent contractor. Lawyers for Chaudry, seeking to sue on behalf of a class of Lyft drivers, said the company didn’t pay drivers minimum wages or compensate them for job expenses like gas and vehicle maintenance. The company also shortchanged drivers on their cut of riders’ fares, according to the complaint.

Chaudry’s lawyers voluntarily withdrew the complaint in April 2018, after Lyft argued the drivers were required to take their cases to arbitration individually. The company has used mandatory arbitration agreements included in driver contracts as a valuable shield against class actions, forcing drivers to instead fight their cases one at a time in proceedings that typically are not made public.

“In many ways this approach to forcing individual arbitration is calling a bluff,” said Veena Dubal, a law professor at the University of California, Hastings College of Law. “The companies are banking on the idea that there aren’t enough plaintiffs’ attorneys to do this, that it costs too much to arbitrate each case individually, and that it’s too much work.”

The Lyft drivers’ lawyers say they are prepared to go the arbitration route, if necessary.

“If you reject the offer and we don’t receive a subsequent higher offer, we will file an arbitration demand on your behalf,” Held and Hines said in the notices to drivers. “You may get a higher offer after we do so. If Lyft doesn’t offer more money at that point, we are prepared to fully arbitrate your claim.”

“While there are no guarantees what will happen, we are optimistic that you will be successful at arbitration,” they added.

To contact the reporter on this story: Chris Opfer in New York at copfer@bloomberglaw.com

To contact the editor responsible for this story: John Lauinger at jlauinger@bloomberglaw.com

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