- A Massachusetts court ruled Uber and Lyft must face a lawsuit accusing them of misclassifying drivers.
- After state AG Maura Healey brought the lawsuit last year, the companies moved for dismissal.
- Uber and Lyft are increasingly facing legal challenges for classifying workers as contractors.
- See more stories on Insider’s business page.
A Massachusetts state court on Thursday rejected requests by Uber and Lyft to dismiss a lawsuit accusing the companies of illegally misclassifying their drivers as independent contractors.
The lawsuit, brought by the Massachusetts state attorney general Maura Healey in July, alleged the companies have denied drivers benefits and workplace protections guaranteed to employees by instead classifying them as contractors.
Uber and Lyft then asked the court to toss the case, arguing the state hadn’t done enough to prove drivers were denied benefits and that there wasn’t a legitimate legal dispute over the issue. The court denied both companies’ requests, allowing the case to proceed.
Uber and Lyft did not respond to requests for comment on this story, while labor and driver groups praised the ruling.
“This court order is a complete rejection of Uber and Lyft’s position and a big win for working people,” Massachusetts AFL-CIO president Steve Tolman told Insider in a statement.
“Every worker should be able to earn a decent wage, take care of their health, and protect against harassment and discrimination on the job. We thank Attorney General Healey and her team for holding Uber and Lyft accountable for following the same rules that apply to every other company,” Tolman added.
The two ride-hailing giants have faced an increasing number of legal challenges in recent years over how they classify workers amid growing evidence many drivers are paid less than the minimum wage, and have struggled – particularly during the pandemic – without access to health care, labor protections, and unemployment benefits guaranteed by law to employees.
While companies are typically required to pay into state and federal programs benefiting their workers, Uber and Lyft have passed those costs on to taxpayers. A recent Washington Post analysis found more than 27,000 Uber and Lyft drivers received a combined $80 million from the US government to help them get through the pandemic.
The companies have argued drivers should be considered contractors because they’re able to choose when they can work and which rides they accept, claiming the companies are simply technology platforms that connect drivers and riders.
But a UK court recently rejected that argument, finding Uber and Lyft exercise significant control over drivers – much like a traditional employer – by setting their rates, assigning them rides, and using a rating system to determine their ability to get work on the platform. Uber responded by reclassifying its drivers as “workers,” a category under UK law between employment and contractor, in order to head off further legal disputes with drivers.
California regulators and courts also rejected the arguments put forth by Uber and Lyft, but the companies – along with a coalition of food-delivery companies including DoorDash and Instacart – avoided having to comply with those rulings by spending a combined $200 million to persuade voters to pass a law they wrote that keeps drivers as contractors.
The companies have also spent record amounts on lobbying as the worker classification issue takes the national stage.
The Biden administration’s proposed PRO Act, which wouldn’t automatically reclassify gig workers but would make it easier for them to unionize, has elevated the discussion around which rights and benefits rideshare and food-delivery workers should have – and who should bear those costs.