Massachusetts filed a lawsuit Tuesday against Uber and Lyft alleging that app-based companies misclassify drivers as independent contractors rather than employees. The state is the last to challenge the way the multi-billion dollar industry treats its workers.
“For years, Uber and Lyft have built their multi-billion dollar businesses on a model that exploits drivers,” said Massachusetts Attorney General Maura Healey in a video message announcing the lawsuit. “Uber and Lyft set the rates. Only they set the rules. Drivers are employees. “
Massachusetts is the second state to sue Uber and Lyft for misclassifying drivers. In May, California Attorney General Xavier Becerra, along with attorneys for the city of Los Angeles, San Francisco, and San Diego, sued the companies, arguing that their drivers were misclassified as independent contractors when they should be employed under the law. state AB5 that went into effect. Effect January 1. Becerra recently filed a motion for a preliminary court order that would force transportation companies to reclassify drivers as employees in a matter of weeks.
Earlier, Healey noted that Massachusetts could become the next state to bring Uber and Lyft to court over driver classification. In March, her office filed an amicus report urging a federal judge to order companies to immediately reclassify their drivers as employees and provide them with paid sick leave, saying it could help stop the spread of the coronavirus.
“The bottom line is that Uber and Lyft have had a free ride for far too long,” Healey said Tuesday. “For years, these companies have consistently denied their drivers the basic protection and benefits of the workplace, and have benefited greatly from it. This business is unfair and it is also illegal under Massachusetts law. “
Uber and Lyft have long argued that drivers don’t want to be classified as employees, preferring the flexibility to set their own hours and drive for multiple apps that come with concert work. “Our drivers constantly tell us that the reason they value Uber is because they value their freedom,” Uber CEO Dara Khosrowshahi said in last year’s earnings call. “They are their own boss. They run their own business. “
Now, companies are using the pandemic to argue that states seeking to challenge their driver ratings are jobs in jeopardy.
“At a time when the Massachusetts economy is in crisis with a record unemployment rate of 16 percent, we must make it easier, not harder, for people to start earning income quickly,” said an Uber spokesman. it’s a statement. “We will discuss this action in court, as it runs counter to what the vast majority of drivers want: to work independently. We are ready to work with the state to modernize our laws so that freelancers receive new protections while maintaining the flexibility they prefer. ”
“This lawsuit threatens to cut jobs for more than 50,000 people in Massachusetts at the worst possible time,” a Lyft spokesman said in a statement. “Drivers don’t want this: 89 percent of Massachusetts Lyft drivers drive less than 20 hours a week and choose to share the ride precisely because of the independence it gives them to earn money in their spare time.” Across the country, drivers have said they want to remain independent contractors on employment by a margin of 4 to 1 “.
Drivers have long complained about low pay, lack of protections, and the inability to unite as a union to achieve change. There have been stories about drivers who sleep in their cars because they can’t afford to live in the cities where they work, struggling to make ends meet and feeling at the mercy of a faceless algorithm that dictates their every move.
If the lawsuit is successful, tens of thousands of Massachusetts drivers may be eligible for the type of benefits traditionally associated with full-time employment: health insurance, workers’ compensation, unemployment insurance, and a minimum wage guarantee.
But more importantly, it could accelerate the fragmentation of the transportation industry, in which drivers are treated as employees in some states and contractors in others. Experts predict that companies will likely pass those costs on to consumers through higher rates with only a modest impact on demand.
