Uber, Lyft Face Misclassification Lawsuit from Massachusetts AG

Massachusetts has become the most recent state to file a misclassification lawsuit against Lyft and Uber. The lawsuit alleges that the ridesharing companies have misclassified employees as independent contractors, effectively denying them the rights ensured for employees including overtime and rest breaks. However, the ride-hailing companies and some workers have pushed back on state efforts to have these workers reclassified as employees, claiming it will threaten their way of doing business.

Massachusetts Misclassification Lawsuit

Massachusetts became the second state to file a misclassification lawsuit against the two ridesharing giants on Tuesday, July 14, the Verge reports. State officials, including Massachusetts Attorney General Maura Healey, argue that Uber and Lyft have classified workers as contractors in order to take advantage of those workers.

“For years Uber and Lyft have built their billion-dollar businesses on a model that exploits drivers,” Healy said in a video announcing the suit. “Uber and Lyft set the rates. They alone set the rules. Drivers are employees.”

Healey has signaled that her office would be coming after companies that allegedly have been exploiting gig workers for some time. In March, the office filed an amicus brief which asked a federal judge to order these companies to reclassify their workers as employees immediately. Healy argues that such a reclassification could help stem the tide of the coronavirus by providing paid sick leave to these employees.

“The bottom line is Uber and Lyft have gotten a free ride for far too long,” the Verge reports Healey said on the day of the filing. “For years these companies have systematically denied their drivers basic workplace protections and benefits, and profited greatly from it. This business is unfair and it’s also illegal under Massachusetts law.”

California and Assembly Bill 5

California lawmakers rocked the gig economy when they passed Assembly Bill 5 (AB5) last year. The law, which went into effect this January 1, creates stricter guidelines for determining when workers can be classified as independent contractors. The law has faced considerable push back from companies that rely on the gig economy as well as worker’s groups representing independent truck drivers and others.

In May, city attorneys across California and Cali. Attorney General Xavier Becerra filed a misclassification lawsuit against Uber and Lyft regarding their classification of workers under AB5. More recently, Becerra filed a motion for a preliminary injunction that would require ridesharing companies to reclassify their workers within weeks.

Criticisms of Reclassification

Uber, Lyft, and other critics of the recent push for reclassification of gig workers claim that these workers don’t want to be classified as employees. They argue that reclassification would limit workers’ flexibility and control over their own work. This includes setting their own schedule and working for multiple apps.

“Our drivers consistently tell us that the reason why they value Uber is they value their freedom,” Uber CEO Dara Khosrowshahi said in an earnings call held last year. “They’re their own boss. They run their own business.”

Many of these companies have also begun arguing that state efforts to challenge current classifications are risking jobs during a pandemic.

“At a time when Massachusetts’ economy is in crisis with a record 16 percent unemployment rate, we need to make it easier, not harder, for people to quickly start earning an income,” Uber said in a statement reported by the Verge. “We will contest this action in court, as it flies in the face of what the vast majority of drivers want: to work independently.”

“This lawsuit threatens to eliminate work for more than 50,000 people in Massachusetts at the worst possible time,” Lyft said in a statement. “Across the country, drivers have said they want to remain independent contractors over employment by a 4 to 1 margin.”

What Reclassification Means for Workers

Employees are guaranteed a variety of rights and benefits that independent contractors aren’t. For example, employees are guaranteed a minimum wage, overtime pay, rest breaks, and employee benefits including health, life, and disability insurance. Employees also aren’t required to pay the same level of employment tax as contractors. In fact, there is a range of expenses that contractors pay which would otherwise be covered by an employee’s employer.

If the Massachusetts misclassification lawsuit succeeds, the Verge reports that tens of thousands of Mass. drivers and gig workers could be eligible for these employee benefits. It also represents the next step in the fragmentation of the ridesharing industry with its inconsistency on worker classifications across states. The Verge reports that experts expect the added cost of the reclassification will likely be passed off on consumers.

Join a Free Uber Lyft Misclassification Class Action Lawsuit Investigation

If you are an Uber or Lyft driver (active or inactive), you may have been misclassified as an independent contractor, and you may qualify to join this Uber Lyft Driver Misclassification Class Action Lawsuit Investigation.

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This article is not legal advice. It is presented
for informational purposes only.