A judge for the US District Court for the Northern District of California [official website] on Thursday approved a $27 million settlement [order, PDF] in a class action lawsuit between Lyft Inc. [corporate website] and its drivers. The suit challenged Lyft’s characterization of the drivers as independent contractors. Drivers for the company asserted they should be identified as employees, which would entitle them to reimbursement for their driving expenses, such as gas and maintenance. The settlement keeps the drivers classified as independent contractors but provides monetary relief to drivers who logged the most miles and provides them with benefits. Judge Vince Chhabria described the agreement as “not perfect,” and stated, “the status of Lyft drivers under California law remains uncertain going forward.” The company says that a survey reports more than 80 percent of their Lyft drivers prefer being labeled as independent contractors because of the flexibility in having that status.

With the rapid growth of companies like Lyft and Uber, ride-sharing services have been among the most controversial business models [JURIST backgrounder] in recent history. In January Uber agreed to pay [JURIST report] a $20 million settlement in regarding to allegations the company engaged in misleading tactics to recruit new drivers. Last April Uber settled a lawsuit [JURIST report] brought by 385,000 drivers in California and Massachusetts regarding their status as independent contractors. In several states, ride-sharing companies have met significant legal opposition, frequently led by competitors such as the taxi industry. Other unresolved questions [JURIST backgrounder] surrounding this new business model continue to prompt debate among lawmakers. Although some cities and states, such as California, have developed new laws [PC360 report] mandating certain insurance for ride-sharing drivers, others have resisted. In June 2015, Attorney General of New York Eric Schneiderman announced a $300,000 settlement [press release] with Lyft after they were charged with violating local regulations in Rochester and Buffalo.