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Lyft will give drivers $12.25 million in compensation, but they're still not employees

Lyft has agreed today to pay drivers $12.25 million in compensation, give them certain benefits, and warn them when they are about to be deactivated, Reuters reports — but the ride-sharing service still won't classify them as employees. A court filing detailed the settlement, which comes after Lyft drivers brought a lawsuit against the company that argued that they should be classified as employees, and were entitled to travel expenses as part of their work.

An attorney for the Lyft drivers said that the settlement — which still has to be approved by a San Francisco federal court judge — will "result in some significant changes that will benefit the drivers," but that it did not achieve the reclassification as employees they hoped for. Lyft has made efforts in the past to keep its drivers happy, running schemes to get new people involved, and then offering them free gas, but it's been resistant to the idea of making all drivers employees as it could raise labor costs by as much as 30 percent.

Meanwhile, Uber — Lyft's major competitor — might be breathing a sigh of relief at the decision. A similar lawsuit has been brought against the service by disgruntled drivers who want to be treated like full-time workers rather than disposable contractors. Any major decisions in either case as to the status of their drivers could also have significant impact on other companies using the so-called sharing economy, increasing costs as they have to pay for the kind of extras salaried workers are legally afforded as standard.