Wolt Agrees to $9.3 Million Settlement in Israeli Delivery Driver Lawsuit

Food delivery giant Wolt has reached a dramatic settlement agreement with its delivery drivers in Israel, potentially ending a long-standing class-action lawsuit. The agreement, reached after extensive mediation involving over 26 sessions, will see Wolt pay approximately 34.3 million shekels (around $9.3 million USD) to tens of thousands of drivers. Crucially, the settlement preserves the existing model where drivers operate as independent contractors, rather than employees, provided their flexibility and autonomy are maintained.

However, the agreement introduces unprecedented protections and benefits for platform economy workers in Israel. These include a guaranteed minimum wage for hours worked, a pension savings incentive bonus, and enhanced insurance coverage for accidents, disability, or death during deliveries. Wolt will also ensure that drivers' average hourly earnings meet the legal minimum wage, providing supplementary payments if they fall short.

The settlement also addresses procedural fairness, incorporating norms against sexual harassment and discrimination, and establishing a right to a fair hearing before a driver's contract is terminated. The differential compensation for drivers will range from 0.05 to 0.20 shekels per delivery, with guaranteed minimum amounts, for approximately 82,513 drivers who made deliveries between November 2018 and the ruling date.

The legal battle began in August 2020 when driver Golan Hazanovich filed a class-action lawsuit, arguing that despite Wolt's claims of flexible work, the app's algorithm effectively managed and supervised drivers, thus establishing an employer-employee relationship that entitled them to full social rights. In August 2022, the Tel Aviv Regional Labor Court ruled that there was a reasonable possibility of establishing such an employment relationship.

Wolt appealed this decision, arguing that traditional employment tests were unsuitable for the flexible nature of platform work. The Attorney General's office also weighed in, expressing reservations about certifying the case as a class action due to the complexity and variability among drivers' situations. The mediation process, overseen by retired Supreme Court Justice Prof. Yoram Danziger and retired National Labor Court Judge Michael Spitzer, ultimately led to this historic proposed settlement, which still requires court approval.