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Lyft’s $12.25 million settlement with its drivers has been rejected

A California judge issued a preliminary ruling Thursday rejecting Lyft's $12.25 million settlement with some of its drivers. US District Judge Vince Chhabria said the settlement amount would have "shortchanged" drivers, according to Reuters.

"We're disappointed in the preliminary ruling."

Chhabria's statement appears to be a reference to a recent report that found that Lyft would owe its drivers $126 million in reimbursement expenses for the last four years if the ride-hail service classified them as employees rather than independent contractors.

In January, Lyft agreed to pay the sum to many of its California drivers who, in a class action suit against the company, were challenging their classification as independent contractors. As part of the agreement, the company said it would give them certain benefits, and warn them when they are about to be deactivated. The settlement was seen as an attempt to avoid reclassifying the drivers as employees, which would have possibly driven the company out of business.

"We're disappointed in the preliminary ruling," a Lyft spokesperson said. "We believe we reached a fair agreement with the plaintiffs and are currently evaluating our next steps."

Shannon Riss-Liordan, the attorney for the Lyft drivers, said, "We are hopeful this settlement can be improved to meet the judge's concerns. If not, we look forward to taking this case to trial as well."

Uber is also facing a driver lawsuit of its own. That case is set to go to trial in June.