Uber and Lyft should treat their drivers in Massachusetts as employees with the right to receive benefits, instead of misclassifying them as independent contractors, the state’s attorney general said in a lawsuit filed against the ride-hailing companies.
The suit, made public on Tuesday, makes Massachusetts the second state after California to challenge how Uber and Lyft classify drivers and could deal another blow to their business model. Maura Healey, the state’s attorney general, mailed in the complaint to Massachusetts Superior Court in Suffolk County.
Uber, Lyft and other so-called gig economy companies have maintained that their drivers are independent contractors who are ineligible for benefits like sick leave, paid time off and unemployment insurance. But the companies are facing increasing pressure to reclassify drivers as employees, who would have greater recourse to push back for better working conditions and pay.
“Uber and Lyft have built their billion-dollar businesses while denying their drivers basic employee protections and benefits for years,” Ms. Healey said in a statement. “This business model is unfair and exploitative. We are seeking this determination from the court because these drivers have a right to be treated fairly.”
Massachusetts is asking the court to rule that the drivers for Uber and Lyft are, in fact, employees under state law. It is also seeking an injunction to prevent the companies from denying drivers protections afforded to employees.
An Uber spokesman, Matt Kallman, said in a statement: “We will contest this action in court, as it flies in the face of what the vast majority of drivers want: to work independently. We stand ready to work with the state to modernize our laws, so that independent workers receive new protections while maintaining the flexibility they prefer.”
“This lawsuit threatens to eliminate work for more than 50,000 people in Massachusetts at the worst possible time,” said Julie Wood, a spokeswoman for Lyft. “Drivers don’t want this — most drive only a few hours a week, and they have chosen to drive using Lyft precisely because of the independence it gives them to make money in their spare time.”
Although the Massachusetts law was enacted in 2004, the state had not tried to enforce it against Uber and the other gig economy start-ups that have disrupted transportation, hospitality and food delivery over the last decade. Instead, Uber drivers in Massachusetts have sought employment status through individual lawsuits and class actions, but many of those cases have been pushed into arbitration or are still making their way through the court system.
The state is suing now because of the coronavirus pandemic, officials in the attorney general’s office said. Employment protections like paid sick leave, health insurance and guaranteed income are especially valuable during a global health crisis. Uber and Lyft have said they will provide drivers with financial assistance for up to 14 days if they test positive for the virus or are forced to stay home. Demand for rides has plunged during the crisis, however, curbing the ability of many drivers to earn an income.
Uber and Lyft are also fighting a legal battle in California, where the state attorney general and the city attorneys of San Francisco, Los Angeles and San Diego sued the companies to enforce a state law, known as Assembly Bill 5, that defines gig economy workers as employees.
Massachusetts and California use similar legal tests to determine whether workers are independent contractors or employees. Laws in both states say a worker should be classified as an employee if the employer controls the worker’s wages and schedule, the worker performs a service that is a core part of the employer’s business and the worker does not have an independently established business doing similar work.
Uber has argued that its core business is technology, not rides, and therefore drivers are not a key part of its business. It has also tweaked its service in California since A.B. 5 went into effect on Jan. 1, allowing drivers to see fares upfront and reject low-paying rides without paying a penalty.
Uber, Lyft and DoorDash have also poured tens of millions of dollars into Proposition 22, a measure on the November ballot in California that, if passed, would exempt them from the state’s labor law.