Lyft Class Action Lawsuit Says Drivers are Underpaid

Lyft Inc. was hit with a class action lawsuit alleging the rideshare service conceals the amount it charges customers, underpays drivers and pockets the difference.

Lead plaintiff Keara Nieves alleges in her class action lawsuit that Lyft breaches its contract with its drivers. According to the Lyft class action lawsuit, Lyft contracts with drivers to pay them what it charges riders minus a commission and various fees. However, Lyft actually charges riders a higher fare and conceals this fare from the drivers, Nieves claims.

“Lyft contractually promises through its Lyft Terms of Service agreement (‘the ‘LTS’),” the lawsuit states. “That it will provide its Lyft Drivers the fare it charges riders (plus tips if applicable) less Lyft’s service fee or ‘Commission’ for creating, maintaining, and marketing the Lyft Platform matching Lyft Drivers to Riders who seek to be transported from one location to another, and any applicable charges such as service fees, cancellation fees, damage fees, tolls, surcharges, and taxes.”

“The Commission taken by Lyft is typically 20% or 25% of the fare depending on when the driver contracted with Lyft,” explains the plaintiff. “Lyft, however, does not pay the Lyft drivers these promised amounts. Instead, it charges Riders a higher fare than what it informs the Lyft Drivers based on a separate fare calculation reflecting actual miles and minutes driven.”

According to the class action lawsuit, Lyft is cheating drivers out of what it allegedly owes them under contract.

Nieves alleges that compared with its ridesharing competitor, Uber, Lyft has cultivated a community friendly image that it values its drivers; however, says the plaintiff, Lyft has been systematically underpaying them instead.

The plaintiff says that as a Lyft driver, she understood her contract with the rideshare company to mean that she would receive the fare charged to the rider, minus Lyft’s commission and any applicable fees.

“[A] reasoned reading of the LTS indicates that the fare charged to Riders should be the same fare used to calculate the Driver’s fee,” alleges the Lyft class action lawsuit.

In reality, contends Nieves, Lyft pays drivers based on a calculation of the distance and time driven, not based on the fare it charges riders.

“This creates a discrepancy between the fare charges to Riders and the amount that Lyft improperly uses as a basis for paying Lyft Drivers,” alleges the class action lawsuit. “A discrepancy that Lyft conceals from Lyft Drivers like Plaintiff.”

The plaintiff seeks to represent a nationwide Class of Lyft drivers who opted out of arbitration in the Lyft contract. Nieves alleges that Lyft’s payment scheme breaches the contract they made with their drivers as well as the implied covenant of good faith and fair dealing and also amounts to fraud.

The plaintiff is seeking damages and an injunction against Lyft from engaging in the alleged underpayment practice.

Nieves it represented by Stephan T. Mashel of Mashel Law LLC.

The Lyft Driver Underpayment Class Action Lawsuit is Keara Nieves v. Lyft Inc., Case No. 3:17-cv-06146-FLW-DEA, in the U.S. District Court for the District of New Jersey.

UPDATE: On May 31, 2018, a New Jersey federal judge tossed a class action lawsuit challenging Lyft Inc.’s method of calculating driver pay.