By Nate Raymond

BOSTON : The Massachusetts top court on Thursday cleared the way for voters in the state to decide whether drivers for app-based companies like Uber Technologies and Lyft should be classified as independent contractors who would be entitled to some new benefits but would not be legally employees.

The Massachusetts Supreme Judicial Court rejected a labor-supported challenge to an industry-backed coalition’s proposal to cement the drivers as contractors. But it also said it would allow a dueling ballot measure that would allow the drivers to unionize to move forward.

The decision came ahead of closing arguments set for Friday in a trial in a lawsuit pursued by the state’s Democratic attorney general, Andrea Joy Campbell, accusing Uber and Lyft of misclassifying their drivers as contractors, not employees.

Should the industry fail in court and at the ballot box, Uber and Lyft could face a sweeping overhaul of their business models, one that lawyers for the companies have said could force them to cut or end service in Massachusetts.

Using contractors can cost companies as much as 30% less than hiring employees, various studies showed.

Uber and Lyft, along with app-based delivery services Instacart and DoorDash, have spent millions of dollars to support the ballot proposal that would cement the status of their drivers as contractors under state law.

Flexibility and Benefits for Massachusetts Drivers, a ballot measure committee whose contributors include the four ride-share companies, is also proposing setting an earnings floor for app-based drivers and providing them healthcare stipends, occupational accident insurance and paid sick time.

They’re pushing it after the industry through a $200 million campaign in 2020 convinced California voters to pass a measure similar to the one backed by the companies in Massachusetts, solidifying drivers as independent contractors with some benefits. Litigation challenging that measure is ongoing.

The Massachusetts court in 2022 blocked a similar industry-backed ballot measure. To hedge its bets this time, supporters gathered signatures for five versions of their ballot question, only one of which they will put before voters on Nov. 5. Final signatures for the ballot measure will be turned in July 2.

A separate proposed ballot measure supported by the Service Employees International Union’s Local 32BJ seeks to ask voters to allow Uber and Lyft drivers to unionize.

Conor Yunits, the industry-backed campaign’s spokesperson, called Thursday’s ruling “a huge win and a great day for rideshare and delivery drivers.”

The court rejected a challenge by a labor-affiliated coalition called Massachusetts Is Not For Sale to Campbell’s certification of the industry’s question for potential inclusion on the ballot. The group said the proposal wrongly addressed not one policy question but several bundled together.

But Justice Gabrielle Wolohojian, writing for a 6-0 court, said the provisions in even the broadest of the five proposals “share a single common purpose: establishing and defining the relationship between the drivers and the companies.”

Chrissy Lynch, the president of the Massachusetts chapter of the union AFL-CIO and chair of Massachusetts Is Not For Sale, called the ruling “an unprecedented step back for the voters, workers, consumers, taxpayers and law-abiding businesses of the Commonwealth of Massachusetts, which should not be for sale.” (Reporting by Nate Raymond in Boston, Editing by Franklin Paul and Nick Zieminski)

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BOSTON — Drivers for Uber and Lyft will earn a minimum pay standard of $32.50 per hour under a settlement announced Thursday by Massachusetts Attorney General Andrea Campbell, in a deal that also includes a suite of benefits and protections.

The two companies will also be required to pay a combined $175 million to the state to resolve allegations that the companies violated Massachusetts wage and hour laws, a substantial majority of which will be distributed to current and former drivers.

Campbell said the settlement resolves her office’s yearslong litigation against the two companies and stops the threat of their attempt to rewrite state employment law by a proposed 2024 ballot initiative.

That question would have resulted in drivers receiving inadequate protections and an earnings standard that would not guarantee minimum wage, she said.

“For years, these companies have underpaid their drivers and denied them basic benefits,” Campbell said in a written statement. “Today’s agreement holds Uber and Lyft accountable, and provides their drivers, for the very first time in Massachusetts, guaranteed minimum pay, paid sick leave, occupational accident insurance, and health care stipends.”

Democratic Gov. Maura Healey said the settlement delivers “historic wages and benefits to right the wrongs of the past and ensure drivers are paid fairly going forward.”

In a statement Lyft said the agreement resolves a lawsuit that recently went to trial, and avoids the need for the ballot initiative campaign this November.

“More importantly, it is a major victory in a multiyear campaign by Bay State drivers to secure their right to remain independent, while gaining access to new benefits,” the company said.

Uber also released a statement calling the agreement “an example of what independent, flexible work with dignity should look like in the 21st century.”

“In taking this opportunity, we’ve resolved historical liabilities by constructing a new operating model that balances both flexibility and benefits,” the company said. “This allows both Uber and Massachusetts to move forward in a way that reflects what drivers want and demonstrates to other states what’s possible to achieve.”

The companies were pushing a ballot question that would classify drivers as independent contractors eligible for some benefits, but Campbell said the settlement stops the threat of the ballot question. A competing ballot question seeks to give drivers the right to unionize in Massachusetts.

Drivers will now earn one hour of sick day pay for every 30 hours worked, up to a maximum of 40 hours per year. As part of the agreement, Uber and Lyft must update their driver applications so drivers are able to view and claim their sick leave directly in the app. Drivers will also receive a stipend to buy into the state’s paid family and medical leave program.

Under the deal, Uber and Lyft will also allow drivers to pool together their hours driving for the two companies to obtain access to a health insurance stipend. Anyone who drives for more than 15 hours per week — for either or both companies — will be able to earn a health insurance stipend to pay for a plan on the Massachusetts Health Connector.

Drivers will be eligible for occupational accident insurance paid by the companies for up to $1 million in coverage for work-related injuries.

The agreement also requires the companies to provide drivers with key information — about the length of a trip, the destination and expected earnings — before they are expected to accept a ride.

The companies are barred from discriminating against drivers based on race, religion, national origin, sex, sexual orientation, gender identity, disability or other protected identities — and can’t retaliate against drivers who have filed a complaint about the companies with the Attorney General’s Office.

The deal also requires the companies to provide drivers in-app chat support with a live person in English, Spanish, Portuguese and French and must provide drivers with information about why they have been deactivated and create an appeals process.

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.

Read more: Uber Raises Minimum Wage for Drivers in France Amid Gig Economy Regulation

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