Little sympathy for app-based tech companies at ballot question hearing

IF RIDE-HAILING and delivery companies were hoping for a warm or even lukewarm reception from lawmakers considering a ballot effort to classify app-based drivers as independent contractors, they badly misjudged. 

In a hearing that stretched past six hours, the reception was more like a cold shower as dozens of lawyers, academics, spokespeople, union leaders, and drivers made their case before the special legislative committee tasked with considering the full slate of 2024 ballot measures. Two ballot campaigns underway would fundamentally redefine the relationship between gig-work drivers, the companies that manage them, and the state.

“They are workers,” committee co-chair Sen. Cindy Friedman of Arlington told a panel of Uber, Lyft, DoorDash, and Instacart representatives on Tuesday. The companies have “set up this sort of narrative,” she said, that argues that without independent contractor status “you don’t have any flexibility. And you know, and I know, that that is specious at best. And I don’t trust you, because you’re big corporations. You’re in it to make money, which is fine, not a problem. But I would argue that what has happened over the last several months is because there’s so much scrutiny over these companies.”

The Big Tech-backed ballot campaign is pushing five different versions of a measure that would classify drivers with transportation network companies, often called TNCs, as independent contractors and in some cases guarantee a set of benefits. Proponents say they only intend to send one question to the ballot. Another measure put forward by 32BJ SEIU and the International Association of Machinists (IAM) would give the drivers the right to form unions and collectively bargain.

A 2020 lawsuit brought by then-Attorney General Maura Healey and set to go to trial in May under her successor Andrea Campbell kicked off the years-long fight over Bay State employment law, with the state arguing that Uber and Lyft were misclassifying their workers as independent contractors. A 2022 swing at the ballot in Massachusetts from the tech companies ended with the state’s highest court tossing it from the ballot, and legislators have moved glacially since then on bills that would offer an array of benefits or protections to app-based drivers or reclassify them.

“Our preference is to work with you all, work with the Legislature, find a compromise. But, unfortunately, we have no choice but to pursue these ballot initiatives,” said Brendan Joyce, Lyft’s public policy manager in Massachusetts. 

Roxana Rivera, assistant to the president of 32BJ SEIU, also pleaded for a legislative solution.

“All parties should come to the table to share their different viewpoints and concerns,” she said. “Though whatever those differences may be, we emphasize that labor stands united in the goal of improving the rideshare industry while protecting the rights of all Massachusetts workers.”

At stake, all sides argue, is nothing less than the sustainability of the still relatively new app-based gig-work industry in Massachusetts and the wellbeing of its workforce. 

Classifying the drivers as independent contractors, the ride-share company coalition says, is essential to maintain the specific kind of flexibility that app-based drivers currently have. Drivers can be on multiple apps at the same time, choosing their own schedules, and most Massachusetts drivers are not working the equivalent of a full-time job on the apps.

Some drivers told legislators that they need to be independent contractors to decide when and how long to work, citing disabilities or side hustles that make a normal full-time or part-time job difficult to manage. Organized labor groups say nothing in state law prevents the companies from offering that kind of model or the benefits laid out in some of the ballot versions if they want to.

Hilary Robinson, a professor at Northeastern University who focuses on the relationship between law and technology, warned about claims of “technological exceptionalism,” that “because the ride share industry is using new technology that it is fundamentally new and therefore needs new legal process in order to be regulated.”

Lawmakers grilled company representatives on why companies needed a legal third category – independent contractors but with specific benefits laid out in law – to give their drivers flexibility. The answer: dollars and cents in a competitive industry. 

“It’s true there’s no law that says an employer can’t let his employees decide for themselves when to clock in and clock out, walk off the job whenever they want and work just three hours a week,” said Kate Rumbaugh, head of government relations at DoorDash. “But employment laws collectively create a framework that makes it economically impossible for an employer to operate that way.”

The “dynamic pricing model” that changes the cost of a ride depending on demand “would be totally upended” if the ride-share companies changed to a more standard employment model, said Joyce. Rumbaugh said that enshrining benefits in statute means all platforms would need to abide by the standards.

Though Sen. Paul Feeney of Foxborough, a former union leader, warned that lawmakers considering ballot measures “approach these from a lens of skepticism,” that skepticism was largely aimed at the tech companies. Legislators repeatedly thanked labor leaders for their work and advocacy and described the gig-work industry as fundamentally exploitative. 

“I don’t doubt that ride share and delivery drivers value their flexibility, and want to have as much flexibility as possible,” said Sen. Jason Lewis of Winchester. “I think that’s true for all workers. People all value more flexibility in their schedules than less, but you know, I don’t think we’re stupid enough to assume that the reason you spent hundreds of millions of dollars to win at the ballot in California – and the reason you’re essentially holding a gun to our heads in Massachusetts, saying that if you don’t get your way in this state, you’ll similarly go to the ballot – is because of your professed care about the status of your drivers.” 

More than $200 million went to a ballot campaign in California that carved the drivers and the tech companies that own the apps out of state employment law standards, prompting legal challenges now before that state’s supreme court. 

Across the country, states are grappling with the implications of how quickly ride-hailing and delivery services became essential. Drivers cobble together paychecks across multiple jobs and are often the only way people in more rural areas can get home deliveries. 

Minnesota lawmakers are strategizing after Uber and Lyft announced they will stop providing service in Minneapolis because of a new ride-hailing drivers’ pay rate ordinance. The companies agreed to pay $328 million to settle wage theft claims in New York last year, ending a probe by the state attorney general into Uber and Lyft’s classification of drivers as independent contractors instead of employees. After Washington became the first state in the nation to pass a minimum wage guarantee for drivers that comes with a classification as independent contractors, the state has since passed laws making the drivers eligible for unemployment insurance and paid family and medical leave.

When Feeney asked if Uber and Lyft would leave if the state didn’t get on board with the independent contractor classification, representatives for both cited competitiveness in demurring. 

“Realistically, when we look around the jurisdictions, both at the state level here in the United States and also around the world where our business operates, there isn’t any jurisdiction where drivers operate as employees,” said Lucas Munoz, Uber’s director of driver policy. “I think that’s a relevant data point, but I can’t answer your question. I can’t answer your question directly.”

Massachusetts courts are a parallel battleground. Along with the attorney general’s Superior Court suit against Uber and Lyft, both campaigns are facing legal challenges before the Supreme Judicial Court, with opponents arguing that they run afoul of “relatedness” rules governing what can and cannot be put in front of voters. 

Labor groups say the tech-backed measures would so fundamentally alter the state’s employment laws that voters would be asked to sign off on a labyrinth of conflicting policy positions even in the case of the most bare bones version. 

The conservative Fiscal Alliance Foundation is suing to block the SEIU and IAM ballot measure, arguing that it pulls together too many different topics, including whether drivers for Uber and Lyft can collectively bargain and how; what kinds of wages, benefits, and working conditions would be expected; and, according to the Fiscal Alliance, creating a special classification of independent contractors permitted to engage in collective bargaining. 

Just as drivers are not in full agreement on their contractor status – the ride-hailing coalition says they would like to be independent contractors while labor leaders and legislators repeatedly suggested that drivers are being misled – neither are labor groups in agreement over the SIEU and IAM measure. 

The Massachusetts AFL-CIO, which is leading the charge to boot the classification question from the ballot, is silent on the unionization question. 

John Mataya, state legislative director for the International Brotherhood of Teamsters, said the group opposes both campaigns, though they are “not created equal.” Each ballot campaign seeks to create a compromise “third way,” he said, which would erode the protections already guaranteed under Massachusetts’s labor laws.

“The SEIU version is silent on employee status,” he said. “It does not reaffirm that these workers are employees, doesn’t say they’re independent contractors, but it maintains the status quo on what’s kind of happening. It’s silent. So we see that as a dangerous stepping stone.”

If lawmakers do nothing – or modify the measures in a way that doesn’t suit the proponents – both campaigns could still decide to take their campaigns to Massachusetts voters in November. According to testimony from 32BJ SEIU counsel, the initiatives could all pass without being in conflict, though the labor coalition opposes the tech-backed ballot measures.

As the hearing dragged on, several legislators discussed the ballot fight as a nearly foregone conclusion. Enshrining the unionizing and collective bargaining protections, they suggested, might at least provide some defenses if the companies don’t follow through on their stated commitments to their drivers.

“What I get very concerned about is that if this ballot initiative goes through, which it probably will given the amount of money and how easy the sound bites can be,” Sen. Friedman said, “I get real concerned that that’s going to happen, and then we’re going to have no protections.”