Lyft agreed to pay its drivers as much as $12.25 million as part of a settlement condition that was filed in a federal court in San Francisco.
The settlement also requires the ride-hailing company to provide its drivers certain benefits, as well as a notification if they are bound to be deactivated from the platform.
The court filing came following the argument from Lyft drivers who wanted the company to classify them as employees and not as contractors. The move will also allow them to receive travel expense benefits because of the nature of their work.
While the settlement will definitely bring significant changes that will benefit Lyft drivers, it still failed to resolve the employee reclassification issue that had been the drivers' primary demand in filing the lawsuit.
Back in October, Tech Times reported that Lyft entered a number of partnerships in an attempt to make the lives of its drivers much easier. These include partnerships with Stripe, Shell and Hertz, a car rental company.
According to the company, the partnerships would provide its drivers with access to cheaper car rentals, discounted gasoline and simplified payment methods.
The company hopes that the move will allow it to keep its existing drivers as well as to increase its driver pool.
"We're building the ultimate experience for fun, flexibility and empowerment where you can rent a car, fill it with discounted gas, meet new people, stop for a Starbucks coffee and have your earning deposited into your bank account all in the same day," said Lyft.
In December, Lyft reached an estimated valuation of around $4.92 billion wherein the added funding reportedly came from Saudi Arabia's Prince al-Waleed bin Talal. The prince invested $104.9 million in the company and now owns 2.3 percent of Lyft.
Despite the newly achieved valuation and the numerous efforts it made to keep its drivers happy, Lyft continued to resist the initiative on turning its drivers into full-time employees. The reason could be attributed to the fact that full-time employment could raise labor costs by up to 30 percent.
The settlement, which is subject to court approval, stated that Lyft drivers will continue to work as contractors. Lyft will also amend its terms of service, which should be signed by the drivers in order for them to be consistent in their contractual position.
"We are pleased to have resolved this matter on terms that preserve the flexibility of drivers to control when, where and for how long they drive on the platform and enable consumers to continue benefiting from safe, affordable transportation," said Kristin Sverchek, Lyft's general counsel.