Lyft is an American ridesharing company. With a market capitalization of $18 billion, Lyft is the second-largest ridesharing company in the world behind Uber. ¹

In contrast to Uber’s former “principled confrontation” policy of operating in new markets in a grey-market manner until the company can reshape the regulatory landscape, Lyft has historically been more compliant with government regulators, though it has occasionally operated in legal grey areas. Like Uber, Lyft lobbies at the local, state, and federal levels for favorable regulations and legislation. ²

Lyft has struck partnerships with local governments to replace unprofitable public transportation lines. Typically, Lyft customers receive discounted services, and the governments subsidize Lyft on a per-ride basis. In 2016, Miami-Dade County used $575,000 in federal grant funding to pay for Lyft and Uber rides. ³

History

Lyft was launched in 2012 as a service provided by Zimride, a carpool company founded in 2007 by programmer Logan Green and soon joined by financial analyst John Zimmer. Lyft drivers stood out from competitors by mounting a fuzzy pink mustache on the front of their cars. By May 2013, Lyft was so successful that the company renamed itself Lyft, and the following month, it sold its carpool operations to Enterprise Rent-A-Car. ⁴

In July 2014, New York City put a temporary restraining order on Lyft’s operations at the behest of the city’s Taxi and Limousine Commission (TLC). The TLC charged Lyft with operating as an unlicensed taxi company as it expanded its operations into Brooklyn. Two weeks later, Lyft agreed to abide by TLC regulations, including requirements for drivers to take annual drug tests and state-mandated driving tests every three years. In contrast, Uber operated in a grey-market fashion for two years in New York City before agreeing to recognize regulations that applied to other taxi and rideshare companies. ⁵

In September 2015, Chinese ridesharing company Didi invested $100 million in Lyft and announced a strategic partnership wherein Didi and Lyft customers could access one another’s drivers globally. Lyft later struck similar deals with major ridesharing companies in Southeast Asia and India, though Lyft’s initial deal with Didi collapsed in 2016 after Didi purchased Uber’s operations in China. ⁶

In February 2019, Lyft filed an initial public offering and ended the day with a $22.2 billion valuation. ⁷

Labor Issues

Independent Contractors

In most of the world, Lyft’s drivers are legally considered independent contractors, thereby permitting them to avoid several labor regulations which apply to standard employees. For instance, Lyft is not obligated to provide overtime pay, healthcare benefits, or unionization privileges to its drivers. On the other hand, the independent contractor designation permits ease of employment and a highly flexible work schedules for drivers. Lyft has faced numerous lawsuits and legal challenges from workers and labor unions claiming that the independent contractor designation exploits drivers. ⁸

In 2016, Lyft was sued by its drivers in California who argued that they were misclassified as independent contractors. Lyft eventually settled with the drivers for $12.25 million and agreed to pay increased benefits for drivers, though it maintained its employees’ classification as independent contractors. ⁹

Also in 2016, a British drivers’ union sued Uber in Uber BV v. Aslam claiming that Uber drivers should be entitled to minimum wage. Uber lost the case and continued to appeal until finally being defeated in 2021 in the United Kingdom Supreme Court. Uber and Lyft drivers in the U.K. are now entitled to a minimum wage, annual paid holiday leave, and protection from workplace discrimination. ¹⁰

In January 2019, New York City implemented a rule forcing Lyft and other ride-sharing services to pay a minimum wage of $17.22 per hour. Uber is in the process of suing to overturn the rule as of August 2021. New York City also put a cap on the number of ride-sharing app drivers permitted in the city. ¹¹

In 2020, California passed Assembly Bill 5 (known as the “gig worker bill”) which reclassified all independent contractors in California as employees, with some exceptions. The bill was targeted at Uber and Lyft, though it had a severe negative impact on other industries reliant on contractors. Numerous media outlets announced that they would no longer be hiring freelance writers, and Uber and Lyft announced tentative plans to leave California. ¹²

Later in the year, California voted on Proposition 22 which proposed to exempt “app-based transportation” from Assembly Bill 5. Proposition 22 passed with 59% of the popular vote. ¹³ Uber, Lyft, DoorDash, and other companies dependent on independent contractors spent $200 million to support Proposition 22, making it one of the most expensive ballot initiatives in history. ¹⁴

As of summer 2021, Lyft and Uber are in the middle of a lawsuit led by the Massachusetts Attorney General’s Office for allegedly improperly designating employees as independent contractors. ¹⁵

Sexual Assault Disclosures

Lyft has been criticized for failing to disclose incidents of its drivers committing sexual assault against customers. In May 2018, a CNN investigative report alleged 103 cases of Uber drivers and 18 cases of Lyft drivers committing sexual assault between 2014 and 2018. In response, Uber and Lyft both promised to produce a full report of allegations of sexual assaults made against drivers. ¹⁶

In late 2019, Uber released its report detailing almost 6,000 alleged sexual assaults, but as of June 2021, Lyft has not released its report. Lyft claims the delays are due to waiting for the resolution of a conflict between Uber and the California Public Utilities Commission which might have legal implications for Lyft’s disclosures. ¹⁷¹⁸

As of August 2021, Lyft is facing 72 lawsuits from passengers alleging sexual assault, some of which have claimed that the company has taken inadequate measures to protect its customers. ¹⁹ In one case, 14 women claim to have been raped or sexually assaulted by Lyft drivers, and they have claimed that their complaints were mishandled by the company. ²⁰ Lyft’s delays in disclosing sexual assaults are also being cited in a lawsuit by investors accusing the company of securities fraud, which claims that Lyft allegedly misrepresented its handling of sexual assault cases before its IPO. ²¹

Executive Order 13769

In February 2017, then-President Donald Trump signed Executive Order 13769, which barred citizens of numerous Muslim-majority countries with histories of terrorism from entry to the United States. In response, the New York Taxi Workers Alliance (NTWA) issued a boycott and began a protest at JFK airport in New York City. ²²

Lyft openly supported the boycott and donated $1 million to support the left-of-center American Civil Liberties Union in challenging the executive order. Lyft saw an immediate increase in customers as a result of popular goodwill. In contrast, Uber not only continued serving JFK airport, but even lowered its prices. Then-Uber CEO Travis Kalanick, who was a member of President Trump’s Economic Advisory Council, was accused of supporting President Trump and the executive order. Uber later claimed that its lower prices were an attempt to avoid profiting from the boycott. Nevertheless, Uber lost 200,000 customers in a subsequent boycott campaign. ²³²⁴

Political Contributions

In the 2020 election cycle, Lyft employees gave $1.2 million to political candidates, by far the most of any cycle in the company’s history. From its founding in 2007 to 2018, Lyft employees only gave $200,000. In the 2020 cycle, over 92% of donations went to Democrats and Democratic committees, including $212,000 to then-presidential candidate Joe Biden, $102,000 to Senate Majority PAC, and $72,000 to U.S. Senator Bernie Sanders (I-VT). Then-President Donald Trump received just $53,000 in contributions from Lyft employees. ²⁵

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