Lyft pays $12M to settle class action suit with Califoia drivers - CNET

Last March, two federal judges in San Francisco ruled the cases must go to trial. A change in worker classification from contractor to employee could dramatically increase the operating costs for both companies.

"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, general counsel at Lyft, in a release.

The changes to Lyft's terms of service will eliminate the company's ability to terminate drivers at will, said Shannon Liss-Riordan, the attoey representing the drivers in the suit, in a statement. Lyft will also now pay for arbitration costs for disputes brought by a driver against Lyft for things like driver termination, ride fees and other employment-related claims.

"While the settlement does not achieve everything we had hoped for, namely a reclassification of the drivers as employees, it will result in some significant changes that will benefit the drivers," said Liss-Riordan in a statement.