Massachusetts’ top court has paved the way for voters to decide the classification of gig drivers for app-based companies such as Uber Technologies and Lyft. On Thursday, the Massachusetts Supreme Judicial Court rejected a labor-supported challenge to a proposal backed by an industry coalition to classify these drivers as independent contractors. This classification would grant drivers certain new benefits without recognizing them as legal employees.

According to Reuters, the court will allow a competing ballot measure that aims to permit these drivers to unionize to proceed. The decision arrives just before closing arguments on Friday in an ongoing lawsuit brought by the state’s Democratic attorney general. The lawsuit accuses Uber and Lyft of misclassifying their drivers as contractors rather than employees for several years.

If the industry loses both in court and at the ballot box, Uber and Lyft could face significant changes to their business models. Lawyers representing Uber and Lyft have warned that such changes could force the companies to reduce or even cease operations in Massachusetts. To support the ballot proposal that would solidify drivers’ status as contractors under state law, Uber, Lyft, and app-based delivery services like Instacart and DoorDash have invested millions of dollars.

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Studies indicate that using contractors can reduce costs for companies by as much as 30% compared to hiring employees. The ballot measure committee Flexibility and Benefits for Massachusetts Drivers, which includes contributions from the four ride-share companies, is also proposing to set an earnings floor for app-based drivers. Additionally, the proposal includes provisions for healthcare stipends, occupational accident insurance, and paid sick leave.

Meanwhile, a separate proposed ballot measure, backed by the Service Employees International Union’s Local 32BJ, seeks voter approval to allow Uber and Lyft drivers to unionize. This dueling measure highlights the ongoing debate over worker rights and classification in the gig economy.

Source: Reuters