  In this paper we study transverse polarization of $\Lambda$ hyperons in
single-inclusive leptonic annihilation. We show that when the transverse
momentum of the $\Lambda$ baryon is measured with respect to the thrust axis, a
transverse momentum dependent (TMD) factorization formalism is required and the
polarization is generated by the TMD polarizing fragmentation function (TMD
PFF), $D_{1T}^\perp$. However, when the transverse momentum of the $\Lambda$
baryon is measured with respect to the momentum of the initial leptons, a
collinear twist-3 formalism is required and the polarization is generated by
the intrinsic collinear twist-3 fragmentation function $D_{T}$. Thus while
these measurements differ from one another only by a change in the measurement
axis, they probe different distribution functions. Recently, Belle measured a
significant polarization in single-inclusive $\Lambda$ baryon production as a
function of the transverse momentum with respect to the thrust axis. However,
this data can in principle be re-analyzed to measure the polarization as a
function of the transverse momentum of the $\Lambda$ baryon with respect to the
lepton pair. This observable could be the first significant probe of the
function, $D_{T}$. In this paper, we first develop a TMD formalism for
$\Lambda$ polarization; we then present a recent twist-3 formalism that was
established to describe $\Lambda$ polarization. Using the TMD formalism, we
demonstrate that the $\Lambda$ polarization at OPAL and Belle can be described
using the twist-2 TMD factorization formalism. Finally, we make a theoretical
prediction for this polarization in the collinear twist-3 formalism at Belle.
