By: Elizabeth West
In July 2020, Massachusetts became the second state, after California, to file suit against Uber and Lyft. The action seeks a declaratory judgment that the ride-share giants’ drivers are employees under Massachusetts Wage and Hour Laws. In a video statement posted to Twitter, Massachusetts Attorney General Maura Healey said, “the law is clear: drivers are employees.” Currently, Uber and Lyft classify their drivers as independent contractors. According to Healy, this is a misclassification. The Independent Contractor Misclassification Statute states that “an individual performing any service…shall be considered to be an employee…unless (1) the individual is free from control and direction in connection with the performance of the service; (2) the service is performed outside the usual course of business of the employer; and (3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.” According to the Attorney General’s complaint, both Uber and Lyft’s “classification systems fail the first part prong of the test: namely that [their] drivers are free from the company’s direction and control.”
The Attorney General’s suit seeks to “obtain a declaration that Defendants misclassify their drivers and, accordingly, to require Defendants to reclassify their drivers as employees and afford drivers the rights and protections of the Wage and Hour Laws.” In support of the claim that Uber and Lyft are misclassifying their drivers, the Attorney General argues that many of the thousands of ride-share drivers in Massachusetts work full-time, and all drivers enter into standardized service agreements “that set out the companies’ non-negotiated terms and conditions.” Furthermore, their algorithms “set the prices customers pay, determine the wages drivers receive, and discipline underperforming workers.”
While current Massachusetts Wage and Hour Laws have been in effect since 2004, concerns about the employment status for gig workers have grown more pressing during the COVID-19 pandemic. The Attorney General notes that “[gig] economy workers are vulnerable without basic protections and benefits – and COVID-19 has made that clearer than ever.” As independent contractors, Uber and Lyft drivers “have not had access to unemployment benefits reserved for full-time employees of traditional businesses,” as “[m]ost government safety net benefits including health insurance, sick pay, workers’ compensation, and unemployment insurance are attached to an employment relationship.” While the federal Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, signed into law on March 27, 2020, “expands states’ ability to provide unemployment insurance for many workers impacted by the COVID-19 pandemic, including for workers who are not ordinarily eligible for unemployment benefits,” the actions taken by Massachusetts and California seek to offer a permanent solution to these employment issues.
California is mounting a similar legal battle against Uber and Lyft. Under Assembly Bill 5 (“AB5”), passed in January of 2020, employment status is analyzed using a three-part “ABC” test. Similar to Massachusetts Wage and Hour Laws, “[t]he gist of the test rests upon the fact of whether or not the worker is free from the control of the company.” Specifically, AB5 provides that a worker will be “presumed to be an employee” unless they: (1) are free from the control and direction of the hiring entity in connection with the performance of work; (2) perform work that is outside the usual course of the hiring entity’s business; and (3) are customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
Recent developments in California may provide some guidance for Massachusetts. While Uber and Lyft argued that AB5 does not apply to their companies as they are not transportation businesses, but rather multi-sided platforms, the court in California disagreed, and granted the state’s request for a preliminary injunction.
COVID-19 brings to light serious employment issues with the gig economy. The recent filings in both Massachusetts and California are important steps in offering necessary protections for many thousands of state residents who work as ride-share drivers for Uber and Lyft and could signify an important shift in employment law going forward.
Student Bio: Elizabeth West is a second-year law student at Suffolk University Law School. She is a staffer on the Journal of High Technology Law. Elizabeth graduated summa cum laude from The University of Massachusetts Boston with a degree in History.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
