Ride hailing app Lyft Inc. looks to have ended a class-action battle between itself and its drivers yesterday after agreeing to settle out of court for $12.25 million.

The settlement, which still needs to be ratified by Judge Vince Chhabria of the California Northern US District Court, would bring to an end a battle which started when Lyft’s California-based drivers accused the ride-sharing firm of violating state employment laws by classifying them as contractors rather than full-fledged employees.

According to the deal drawn up between the two parties, Lyft will pay compensation to its drivers and will also draw up new rules on how it handles things like driver ratings, driver payment claims, and account deactivations. In return, Lyft’s drivers will drop all of their claims against the company, and agree to be defined as “contract workers” rather than employees.

The proposal states that Lyft’s drivers will gain significant benefits and protections as a result of this reclassification. The deal will also “require changes to Lyft’s business practices that are more consistent with an independent contractor relationship, and provide monetary relief proportional to both the strength of the Drivers’ claims and the amount of time they have Driven for Lyft.”

The compensation amount will be shared among Lyft’s drivers according to how many hours they have worked for the company. Drivers who worked a 30-hour or longer work week for more than half their time with the company will receive large payouts than those who haven’t.

Lyft has also agreed to waive its “at-will” provisions for terminating drivers. Instead, it will now create a process that provides more clarity for drivers as to why their accounts are being deactivated. Drivers who are unhappy with the reasons for their deactivation will be able to appeal. In addition, Lyft will institute a new arbitration service for drivers who wish to claim money from the company.

While Lyft has managed to strike a deal with its drivers, a similar fight between rival ride hailing service Uber Technologies Inc. and its drivers is still ongoing. The two parties in that class-action case also disagree on whether or not drivers should be considered as employees and therefore be covered by state employment laws.

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