(Reuters) - Five Lyft drivers and the Teamsters union will object to a proposed class action settlement, saying it would shortchange drivers by keeping them as independent contractors instead of employees, a union spokesman said on Tuesday.
Lyft and larger rival Uber face separate lawsuits brought on behalf of drivers who contend they are employees and entitled to reimbursement for expenses including gas and vehicle maintenance. The drivers currently pay those costs.
Employment status is a critical one for the so-called sharing economy technology companies. The Uber and Lyft cases have been closely followed because a determination that the workers are employees rather than contractors could affect the valuations of other startups that rely on large networks of individuals to services.
The proposed Lyft settlement, filed in San Francisco federal court in January, provides for Lyft to pay $12.25 million, as well as give drivers notice if they are to be deactivated from the platform and other benefits.
But the deal, which would have to be approved by a San Francisco federal judge, would not classify drivers as employees. The driver objections on Tuesday could lead the judge to scrutinize the settlement.
The five drivers along with the Teamsters Union plan to criticize the settlement which would pay drivers an average of less than $60, the union said on Tuesday. That is much less than what they are owed as employees, they said.
"This settlement will leave Lyft's business model intact," said Rome Aloise, president of Teamsters Joint Council 7.
A Lyft representative declined to comment. Plaintiff attorney Shannon Liss-Riordan said she had not seen the union objections, but in the past has defended the deal, saying it provided significant benefits for drivers.
The Teamsters also said it filed an unfair labor practice charge at the National Labor Relations Board, alleging Lyft's business practices deprive drivers of the right to join a union.
Reporting by Dan Levine and Ankit Ajmera in Bengaluru; Editing by Ted Kerr and Cynthia Osterman