Massachusetts AG seeks ruling that Uber and Lyft drivers are “employees”
Monday, July 20, 2020

Massachusetts AG seeks ruling that Uber and Lyft drivers are “employees”

By Payroll and Entitlements Editorial Staff

Massachusetts Attorney General Maura Healey stated on July 14 that she has filed a lawsuit seeking a court ruling that Uber and Lyft drivers are employees under Massachusetts Wage and Hour Laws, a designation that will allow drivers access to critical labor rights and benefits, such as minimum wage, overtime, and earned sick time.

In the complaint for declaratory judgment, filed in Suffolk Superior Court against Uber Technologies Inc. and Lyft Inc., AG Healey seeks a determination from the court that Uber and Lyft drivers are employees, not independent contractors as the companies have misclassified them. The AG’s complaint also seeks an order declaring that these drivers are entitled to protections under the Wage and Hour Laws.

“Uber and Lyft have built their billion-dollar businesses while denying their drivers basic employee protections and benefits for years,” said AG Healey. “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 AG’s Office alleges that Uber and Lyft are unable to meet a three-part test under state law that would allow them to classify drivers as independent contractors. In Massachusetts, a worker who provides any service for another party is presumed to be an employee and may not be classified as an independent contractor unless that party can prove:

  • The worker is free from their direction and control;
  • The services the worker performs are outside the usual course of their business; and
  • The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the service performed for the party.

According to the AG’s complaint, Uber and Lyft drivers are not free from the companies’ direction and control. Drivers must enter into standardized service agreements that set the companies’ non-negotiated terms and conditions, performance standards, and forced arbitration provisions that prevent drivers from bringing private litigation to enforce their rights under the state Wage and Hour Laws. Uber and Lyft claim drivers set their own schedules and may choose to work as many or as few hours as they wish, yet they closely monitor drivers’ activities through their apps and offer financial incentives to induce drivers to work shifts that directly benefit the companies. Uber and Lyft may also penalize drivers for not accepting enough rides, cancelling too many rides, failing to maintain customer satisfaction ratings, or engaging in any conduct the companies determine to be grounds for suspension or termination. Uber and Lyft also unilaterally determine their drivers’ pay structure, which is calculated using complicated formulas that change frequently.

The AG’s complaint asserts that Uber and Lyft drivers provide a service that is essential to the companies’ core business as transportation service providers, and without their drivers, these companies would cease to exist. Moreover, Uber and Lyft drivers are not engaged in an independently established occupation or business. The drivers are not true independent entrepreneurs with the ability to grow their businesses using their individual abilities, and Uber and Lyft directly rely on and benefit from their fare volume under the companies’ required fee-splitting arrangements.

According to the Attorney General, by misclassifying drivers as independent contractors, Uber and Lyft deny their drivers basic protections under the Massachusetts Wage and Hour Laws. Many drivers are not even guaranteed the state minimum wage or overtime because the companies don’t pay them for time spent between rides or reimburse them for necessary business expenses such as fuel, vehicle maintenance, and insurance. The companies only recently began offering drivers temporary paid leave due to the COVID-19 pandemic, but even these new policies fail to comply with the Massachusetts Earned Sick Time Law. And drivers who think they were wrongly suspended or terminated cannot challenge those actions in court because their service agreements require them to go to arbitration.

In seeking a declaratory judgment, the AG’s Office asks the court to order Uber and Lyft to reclassify their drivers as employees, making available to them the benefits and protections afforded by the Massachusetts Wage and Hour Laws, including those granted by the Wage Act, Minimum Wage Law, Overtime Law, Earned Sick Time Law, and Anti-Retaliation Statutes.

This matter is being handled by Assistant Attorneys General Karla E. Zarbo, Erin Staab, and Alex Sugerman-Brozan, and Investigator Kevin Shanahan, all of the AG’s Fair Labor Division, and Senior Counsel William W. Porter of the AG’s Office of the State Solicitor. (Commonwealth of Massachusetts, Office of the Attorney General, Press Release, July 14, 2020).

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