Updated: Jul 15, 2020
Attorney General (AG) Maura Healey today announced a lawsuit seeking a court ruling that Uber and Lyft drivers are employees under Massachusetts Wage and Hour Laws.
The designation will allow drivers on the ride-hailing platforms 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.
AG Healey said: “Uber and Lyft have built their billion-dollar businesses while denying their drivers basic employee protections and benefits for years.
“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. The two firms may also penalise 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.
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.
Uber and Lyft both generate billions of dollars of revenue each year. The companies announced plans to spend $100 million to upend a California law that protects workers from misclassification. Yet these companies deny their drivers access to the most basic wage protections under state laws.
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.
The AG’s Office encourages Uber and Lyft drivers who believe their rights under the Wage and Hour Laws have been violated to respond to the AG’s complaint.
David Weil, Professor and Dean, Brandeis University Heller School for Social Policy and Management and former Wage and Hour Division Administrator in the Obama Department of Labor: “By classifying workers as independent contractors while carefully directing so much of what they do, companies like Uber and Lyft and other platform business models have their cake and eat it too by gaining the benefit of a highly directed workforce while avoiding the responsibilities that come with employment under Massachusetts and federal law. Today's action by Attorney General Healey pushes against this alarming trend and re-establishes the rights and protections workers should expect. This action comes at a critical moment given the risks that are being placed on far too many workers providing essential services.”