Uber and Lyft are facing a trial in Massachusetts over allegations that they misclassified their drivers as independent contractors instead of employees.
The trial is part of a larger legal and political battle over the status of gig workers in the state and across the nation, Reuters reported Monday (May 13).
Massachusetts Attorney General Andrea Joy Campbell argues that drivers for the ride-share companies should be classified as employees under state law and therefore entitled to benefits such as a minimum wage, overtime and earned sick time, according to the report.
Uber and Lyft have maintained that they properly classified their drivers, asserting that the companies are technology companies that facilitate connections between drivers and riders, rather than transportation companies that employ drivers, the report said. The companies warn that a ruling against them could jeopardize their flexible business model in Massachusetts, potentially leading to operational cuts or even ceasing operations in the state.
The lawsuit, filed in 2020 by Campbell’s predecessor Maura Healey, who is now governor of Massachusetts, claims that Uber and Lyft misclassified thousands of Massachusetts drivers and failed to meet the state’s worker-friendly laws that would allow them to be deemed independent contractors, per the report.
If the state prevails, Uber and Lyft could face significant penalties for not properly classifying their drivers, the report said. According to a report by the state auditor, Uber avoided paying $266.4 million into workers’ compensation, unemployment insurance, and paid family medical leave over a 10-year period by not classifying its Massachusetts drivers as employees.
This report comes a week after the Massachusetts Supreme Judicial Court deliberated on whether two ballot proposals aiming to redefine the status of app-based workers should be presented to voters in November.
One proposal from an industry-supported group seeks affirmation from voters that app-based drivers should be classified as independent contractors with supplemental benefits, yet not considered employees of the companies they serve.
The other proposal seeks to enable Uber and Lyft drivers to unionize under state oversight.
Other jurisdictions have dealt with these questions around the gig economy as well. In 2020, California passed Proposition 22, which provides protections and guarantees for workers.
Uber reported in April that since the passage of that law, the company has made an investment exceeding $1 billion in benefits for California drivers and couriers.
In March, Uber and Lyft said they would halt their operations in Minneapolis after the city council voted to require that drivers be paid a minimum wage of $15.57 per hour.