Your Business Deserves To Thrive

Employee or Independent Contractor? That Is the Question (Part I)

On Behalf of | Apr 28, 2016 | Business Management, California Law Update, Uncategorized

As part of our previous blog series titled Uber and Lyft Drivers Might Be Employees, Not Independent Contractors, Under California Law, we wrote about Cotter v. Lyft, a California case involving claims of misclassified drivers.[1]  At the heart of this case was the question of whether Lyft drivers were independent contractors or employees under California law.  Why should this matter to a business?  Because the determination has its consequences– under California law, for instance, employees are entitled to certain benefits and protections, whereas independent contracts are not.

As in the similar lawsuits involving Uber and its drivers, if you recall, Lyft drivers did not quite fit into the traditional descriptions of either employees or independent contractors.  On one hand, Lyft drivers, unlike typical employees, worked as little or as much as they wanted and could schedule their driving around their other activities; on the other hand, Lyft drivers, unlike typical independent contractors, used no special skill when they gave rides and their work was central, not tangential, to Lyft’s business.  These characteristics made it difficult for the court to determine whether Lyft drivers were either employees or independent contractors.  Thus, the court concluded that the decision could only be made by a jury and ordered a trial.  That was in March 2015.

On January 26, 2016, Lyft and the plaintiffs filed a class action settlement and release, agreeing to a full and final settlement and dismissal with prejudice of all claims brought against Lyft in that case.[2]  In addition to the monetary component, the settlement sets forth a number of remedial actions to be taken by Lyft.

This post was part of a two-part series on Cotter v. Lyft and its final settlement.  You can find the other post by searching our blogs at  Read more about the details of the settlement agreement in our next blog post.

This posting is intended to be a planning tool to familiarize readers with some of the high-level issues discussed herein.  This is not meant to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances.  This article should not be treated as legal advice to any person or entity.

Steps have been taken to verify the contents of this article prior to publication.  However, readers should not, and may not, rely on this article.  Please consult with counsel to verify all contents and do not rely solely on this article in planning your legal transactions.


[1] Cotter v. Lyft, 13-cv-04065-VC (N.D. Cal. Mar. 11, 2015).

[2] See generally Cotter v. Lyft, Class Action Settlement Agreement and Release, 13-cv-04065-VC (N.D. Cal. Jan. 26, 2016).  Unless otherwise noted, all references to the case are from this citation.