Massachusetts Becomes the Next State To Sue Uber, Lyft For Misclassification

Massachusetts Attorney General Maura Healey announced the commonwealth’s suit against Uber and Lyft on Tuesday for driver misclassification. The lawsuit claims that drivers are employees under Massachusetts Wage and Hour Laws. The requested court ruling would allow drivers to obtain access to employment rights and benefits, such as minimum wage, paid overtime, and paid sick time.

Attorney General Healey claimed, as California Attorney General Xavier Becerra has,  that Uber and Lyft have misclassified drivers as independent contractors, which affords the companies “significant cost-savings.” The Attorney General stated that Uber and Lyft “deprive drivers of many basic rights and benefits that employees in Massachusetts are entitled to receive.” Specifically, Uber and Lyft allegedly violated the Wage Act, Minimum Wage Law, Overtime Law, Earned Sick Time Law, and Anti-Retaliation Statutes.

“Uber and Lyft have built their billion-dollar businesses while denying their drivers basic employee protections and benefits for years,” Healey said. “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.”  

The suit noted that under the Wage and Hour Laws, an individual is an independent contractor if the individual is “free from direction and control in connection with the performance of the service,” the service “is performed outside the usual course of the business of the employer,” and the worker is “customarily engaged in an independently established trade occupation, profession or business of the same nature as that involved in the service performed.” Otherwise, the worker is presumed to be an employee.

Healey alleged that Uber and Lyft drivers do not satisfy the requirements to be classified as independent contractors. The drivers are not “free from direction and control” because they enter into standard agreements with Uber and/or Lyft and the companies set the fares that consumers pay the companies for rides through their apps, as well as setting how much the drivers will be compensated for their rides. These agreements also include non-negotiable terms and conditions, performance standards, and forced arbitration clauses. Drivers can be penalized for not accepting enough rides or for canceling too many rides. Uber and Lyft also encourage drivers to work at times that will benefit the companies, the complaint said.

The drivers perform a service that is the core of Uber’s and Lyft’s businesses – transportation. They do not have independent businesses, rather the companies are the gatekeepers to their income and benefit from the fare revenue the drivers bring; thus, the Attorney General argued that the drivers are not independent contractors.  

Consequently, the Massachusetts Attorney General claimed that Uber and Lyft violated the Wage and Hours Laws by denying drivers their basic rights and protections under the law because of their alleged misclassification. The Attorney General added that the companies do not reimburse drivers for necessary business expenses, such as fuel, vehicle insurance, vehicle maintenance, and phone charges.

Healey asserted that drivers are entitled to benefits and protections under the laws, including minimum wage, overtime, earned sick time, and the right for anti-retaliation protection. The Attorney General noted that it was only as a result of the COVID-19 pandemic that Uber and Lyft drivers received paid sick leave. 

The complaint seeks a declaratory judgment that Uber and Lyft drivers are employees, not independent contractors as they are currently misclassified. The Attorney General has also sought an order declaring that drivers are entitled to the employment rights and protections provided under the commonwealth’s Wage and Hour Laws.

Massachusetts could be a new legal battleground for those challenging the ride-share giants; while many cases are filed in California, two recent suits against rideshare giants were filed in Massachusetts.