Lyft has agreed to pay more than $12 million in a proposed class-action lawsuit seeking to classify drivers as employees in California. In a settlement agreement reached late Tuesday, the ride-hailing service would extend additional benefits to drivers and pay them to resolve the dispute but not make them official employees.

Shannon Liss-Riordan, the Boston attorney who represented Lyft drivers in the case and negotiated the settlement, said the agreement also includes critical changes to how Lyft will conduct its business, leading to better benefits for workers.

“We believe this is a fair settlement and adequate resolution of the claims we brought, given the risks we faced in the litigation against Lyft,” Liss-Riordan said.

Drivers at risk of deactivation will be given clear notice and an opportunity to present their side.

Previously, Lyft’s terms of service stated that the company could deactivate a driver for any reason; now, the ride-hailing company will only be able to do so for one of a list of predetermined reasons, such as a low passenger rating, according to the settlement agreement. Drivers at risk of deactivation, meanwhile, will be given clear notice and an opportunity to present their side. If a driver is deactivated but would like to contest the decision, he or she he can challenge the ruling in arbitration, at Lyft’s expense. Drivers will also be able to address pay-related issues in arbitration.

The settlement also includes a provision for a “favorite driver” feature, where Lyft drivers who are identified as favorites by their passengers “will receive added benefits,” according to Liss-Riordan.

“We are pleased to have resolved this matter on terms that preserve the flexibility of drivers to control when, where and for how long they drive on the platform and enable consumers to continue benefitting from safe, affordable transportation,” Kristin Sverchek, general counsel at Lyft, said in a statement.

“Apart from this settlement, we continue to explore a variety of ways to provide services and support for our driver community, including the potential for portable benefits, because we believe it is important to preserve the flexibility drivers cherish while also strengthening their safety net.”

The $12.25 million in damages will be paid out in proportion to the amount drivers have driven for Lyft in California, Liss-Riordan says. Based on the data Liss-Riordan’s team has reviewed, the majority of the more than 100,000 drivers who have driven for Lyft have logged less than a total of 50 hours with Lyft.

Liss-Riordan noted that Lyft successfully enforced an arbitration clause in its driver contracts that contains a ban on class actions, which contributed to the decision to seek a settlement rather than pursue the suit further. A federal judge must still approve the settlement.

Meanwhile, Uber, the world’s biggest ride-hailing service, has not been able to enforce a similar clause and will go to trial on June 20 to fight a similar class-action suit brought by California drivers, also represented by Liss-Riordan, seeking to be recognized as employees of the company.

Liss-Riordan says it was her team’s preference to seek greater compensation for the drivers she represents in the suit against Uber.

“In the litigation we are pursuing against Uber, we hear daily complaints from drivers about how they feel Uber has mistreated them … cutting fares without their input, shortchanging them on pay they are owed, and deactivating them for no reason or no legitimate reason,” she says.

“We have not been hearing so many concerns from Lyft drivers, which leads us to believe that Lyft is treating its drivers with more respect than Uber is treating its drivers.”

Uber declined to respond to Liss-Riordan’s comments. In an Uber-commissioned survey released last month, a majority of Uber drivers reported that they worked multiple jobs and liked the platform’s scheduling flexibility, a key element of Uber’s argument that drivers themselves are not looking to become official employees.