Massachusetts takes Uber and Lyft to trial over gig worker status

Massachusetts takes Uber and Lyft to trial over gig worker status

Uber and Lyft will face trial on Monday in a US lawsuit by the Massachusetts attorney general that claims the ride-sharing company misclassified its drivers as independent contractors instead of more expensive employees.

The non-jury trial in Boston comes amid a broader legal and political battle in the Democratic-led state and elsewhere nationally over driver status for app-based companies whose rise has fueled the US gig economy.

Massachusetts Attorney General Andrea Joy Campbell asked the judge to conclude that drivers for Uber and Lyft are employees under state law and therefore entitled to benefits such as minimum wage, overtime and earned sick time.

His office alleges the company for years misclassified thousands of Massachusetts drivers and failed to meet a three-part test under the state’s worker-friendly law that allows them to be considered independent contractors.

Studies have shown that using contractors can reduce company costs by 30% than using employees.

Uber ( UBER ) and Lyft ( LYFT ) argue that they properly classify drivers, saying they are not transportation companies that employ drivers but technology companies whose apps facilitate connections between drivers and potential riders.

The companies warned that, should Suffolk County Superior Court Judge Peter Krupp rule against them, they would not be able to maintain their flexible business model in the state and may be forced to cut back or cease operations in Massachusetts.

Rohit Singla, an attorney for Lyft, said during a pre-trial hearing Thursday that “his client’s current business cannot support drivers as employees, is not set up for it and will not function as such.”

The case will be heard a week after Massachusetts’ highest court heard arguments on whether to allow an industry-backed ballot measure to go before voters in November that defines drivers as contractors but entitles them to some new benefits.

The court appeared open to allowing some version of the proposal to go on the ballot alongside a rival, labor-backed ballot measure aimed at allowing drivers to unionize.

The suit to be heard was filed in 2020 by Campbell’s predecessor, Maura Healey, now the state’s Democratic governor. If the state wins, it says the company could face significant penalties for not properly classifying their drivers.

By not classifying their Massachusetts drivers as employees, Uber and Lyft avoided paying $266.4 million in workers’ compensation, unemployment insurance and paid family medical leave over 10 years, according to a report by state auditors.

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