THE LATEST LEG in a multi-front worker classification fight kicked off in Suffolk Superior Court on Monday, with the start of Attorney General Andrea Campbell’s lawsuit against ride-share giants Uber and Lyft.
Campbell, continuing a suit begun by now-Gov. Maura Healey, argues that the ride-hailing companies have been misclassifying their drivers as independent contractors rather than employees – skirting worker protections and costing the state substantial amounts of tax revenue.
Uber and Lyft say their app-based work model is substantially different – logistically and technologically – from traditional employment. Independent contractor status, the tech companies argue, is essential to maintain the level of flexibility they say drivers demand.
“Although Uber and Lyft characterize drivers as in independent relationships with riders, the reality of the payment process doesn’t reflect that,” Assistant Attorney General Douglas Martland said in his opening statement. “Almost immediately after the ride, the rider pays the company. They collect their share of the ride and then set the rest aside for payments to the driver. That the mechanics of this are done by Uber and Lyft payment processors doesn’t change the reality – they’re just following a sequence that’s been unilaterally established by the company.”
Drivers have roughly 15 seconds to decide whether or not to pick up a ride with limited information, Martland told Suffolk County Superior Court Judge Peter Krupp, who will decide the case after a trial without a jury. They often have no idea how much the ride they are giving will pay them, Martland said. ”What entrepreneur would do that?”
Lawyers for Uber and Lyft took exception to their characterization as transportation companies, arguing that they have no fleets of vehicles nor set shifts for the drivers. It would be a closer comparison, argued Uber’s attorney Michele Maryott, to think of them as akin to coordination and logistics services like travel agents.
“But a travel agent isn’t a provider of transportation,” Maryott told the judge. “A travel agent is an intermediary between those who want a service and those who have a service to provide.”
She and Lyft’s attorney Felicia Ellsworth argued that the court’s inquiry should end well before diving into the mechanics of the Massachusetts’ highly protective “ABC test” for determining whether a worker can be considered an independent contractor. Rather than paying drivers for their driving, they said, the companies provide marketplace services to the drivers. The real employees are the companies’ engineers, they argued.
“Drivers do not provide services to Uber,” Maryott said. “It’s actually the other way around. Uber provides services to its customers on both sides of its platform.” At Lyft, Ellsworth said “there are always two customers in every car: the driver and the rider.”
Should the court decide to dive into the three-pronged ABC test, the tech company attorneys said the nature of their business would fulfill the independent contractor requirements. Gig work is unlike her first job as a waitress, Ellsworth said, because she wasn’t an independent hostess roving around looking for jobs elsewhere,” but was entirely under the direct control of an employer and unable to set her own hours and shifts.
Martland promised the state’s case will “open up the hood” of Uber and Lyft’s business models, on Monday calling the first of dozens of witnesses to begin piecing apart the incentives, price systems, and “objectives that are powering the algorithmic engines of these companies.”
Massachusetts is embroiled in this classification dispute through court fights, ballot initiatives, and pushes for legislative clarity. Uber and Lyft are part of a Big Tech-backed coalition championing a costly and high-stakes ballot campaign to settle the independent contractor versus employee question in the November voting booth.
Supreme Judicial Court justices last week considered labor-backed challenges to five possible ballot initiatives that would, in varying levels of detail, classify app-based drivers as independent contractors and guarantee certain benefits.
Justices signaled some openness to allowing a ballot measure to go forward, which could offer the final word on the status of the still relatively new app-based gig economy.
But the Superior Court’s ruling could serve as a powerful political cudgel for whichever side prevails, so long as Krupp decides the case before residents head to their voting booths. The judge said he expects the weeks-long trial to take just over 96 total hours.
If the court sides with Campbell, ballot measure opponents can add an arrow to their quiver in arguing that the tech companies are trying to purchase a new and friendlier set of laws for their preferred business model. If Uber and Lyft come out on top, it could be a strong wind at their back in arguing that the ballot measure would simply make the classification and benefits of app-based drivers crystal clear.
Political elbows are already being thrown.
State Auditor Diana DiZoglio’s office last week released a report on the hypothetical cost of incorrectly classifying ride-hailing drivers, which a spokesman for the industry-backed ballot question campaign decried as “wildly flawed” and pulling from overtly partisan data sets.
Sen. Lydia Edwards, pushing for legislation that would clearly define app-based workers as employees, called the auditor’s report “the missing puzzle piece” to reach a settlement or legislative compromise based on the industry’s impacts.
The auditor’s office considered two scenarios: either the companies are correctly considering their drivers to be independent contractors, in which case the state is owed nothing, or the drivers should have been treated as employees, depriving the state of about $266 million in combined workers’ compensation, unemployment insurance, and paid family and medical leave payments over the past decade.
A New York enforcement action, arguing wage theft through Uber and Lyft driver misclassification, resulted in a $328 million settlement earlier this year. The settlement also included a specific set of benefits promised by Uber and Lyft to their drivers, terms which approximate some of the benefits the tech companies are pledging to their drivers under Massachusetts ballot measures with more expansive language.
In arguments before the SJC last week, the attorney general’s office noted that a ballot measure that would establish specific rights and procedures for app-based workers to unionize – put forward by 32BJ SEIU and the International Association of Machinists but not uniformly supported by labor groups – could likely co-exist with any outcome of the tech-backed classification measure and the current enforcement court case brought by the attorney general.
Should the courts, the Legislature, or the voters offer a rebuke of the gig work business model, attorneys for Uber and Lyft on Monday offered the now-familiar warning that the companies may pack up their ball and go home.
About 45 percent of drivers use the Uber and Lyft platforms simultaneously, Ellsworth said, and their business model depends on the large number of drivers who drive less than 10 hours a week.
“The government thinks that ruling in their favor would mean that Massachusetts would have tens of thousands of new employees,” she said. “If we were an employer, it would be the third largest in the state. But the reality is an adverse ruling would not result in tens of thousands of new employees. Instead it would result in one less ride-share company.”

