Judge Indira Talwani of the Massachusetts District Court issued a memorandum and order in a class action brought Lyft drivers, alleging they were misclassified as independent contractors and seeking reimbursement for expenses, lost wages, overtime, and paid sick time. Lyft attempted to compel arbitration, which was rejected by the court. The defendant appealed the rejection and filed an Emergency Motion to Confirm Stay Pending Appeal, while the plaintiffs filed an Emergency Motion for a Preliminary Injunction.
Lyft asserted that upon filing its appeal, the court was “divested of jurisdiction to act on any aspect of the case.” The court said that it cannot rule on the appeal, but it can do so on other matters, such as the plaintiff’s preliminary injunction request to preserve the status quo. Lyft’s motion to stay was granted as to their obligation to file and answer discovery, but was denied in relation to plaintiffs’ motion for injunctive relief.
Massachusetts’s Earned Sick Time Law requires that “employers with eleven or more workers must provide paid sick time to employees. Employees earn sick leave at a rate of one hour for every thirty hours worked an may earn up to forty hours of leave per year, but may not use their leave until after 90 days of employment.” Further, “[p]art-time, seasonal, and temporary employees all qualify to earn sick time under the statute.” Federal measures include the Families First Coronavirus Response Act (FFCRA) states that “eligible self-employed individuals may receive tax credits in an amount equal to the individual’s ‘qualified sick leave equivalent amount.’” The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) also helps self-employed workers.
The drivers seeking paid sick time alleged that they are misclassified as independent contractors because Lyft has not shown that “the service [that the drivers provide] is performed outside the usual course of the business of the employer.” Lyft argued that its “core business is as a ‘platform service,’” not as a transportation service. The drivers countered “Lyft holds itself out to the public as a transportation company.” The court said that “despite Lyft’s careful self-labeling, the realities of Lyft’s business – where riders pay Lyft for rides – encompasses the transportation of riders.” Additionally, Lyft’s pricing model and business structure illustrate that Lyft is “directly dependent on the drivers’ services.” The court adds that “applying the Independent Contractor Law would not ‘expand the boundaries’ of Lyft’s business, but merely ensure that Massachusetts wage, overtime and sick time law applies to the drivers who perform the service that Lyft’s business provides to riders.” As a result, the court stated that plaintiffs have a likelihood of success for their misclassification claim.
Further, the balance of equities favors plaintiffs, according to the court. While Lyft argued that classifying drivers as employees would significantly shift its business model the court stated that “[n[othing in the relief sought by Plaintiffs would interfere with drivers’ flexible schedules.” Declaring that Lyft drivers are employees would require the company to provide drivers with paid sick time; this would not require Lyft to change the flexibility of driver schedules.
The drivers argued that they will face irreparable injury if their requests are not granted. Lyft argued that sick leave serves two functions; “to give workers job security when staying home due to illness and to provide income for missed work.” They noted that job security is not an issue because drivers can work as they choose without penalty. Thus, plaintiffs “complaint amounts only to a claim for monetary damages, which, generally, is not sufficient to show irreparable harm.” The plaintiffs alleged contracting and spreading COVID-19 also presents irreparable harm. They said that if they are “‘unable to protect their own health….and the health of Lyft passengers and the general public’ because they will need to keep working to afford basic necessities.”
The court denied the injunction, stating that “[a]lthough Plaintiffs have substantial likelihood of success on the merits of the underlying misclassification claim, the balance of equities weigh in Plaintiffs’ favor, and the requested injunction would support rather than harm the public interest … Plaintiffs have not shown irreparable harm.” The decision comes during the COVID-19 pandemic when drivers have stated that Lyft has “fail[ed] to provide drivers with paid sick time [which] required emergency redress.”
The plaintiffs are represented by Lichten & Liss-Riordan. Lyft is represented by Holland & Knight, as well as Munger, Tolles & Olson.
