Massachusetts top court clears way for gig worker ballot measures to proceed

By Nate Raymond

BOSTON (Reuters) – Massachusetts’s top court on Thursday cleared the way for voters in the state to decide whether drivers for app-based companies like Uber Technologies (NYSE:) and Lyft (NASDAQ:) 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 (NASDAQ:) and DoorDash (NASDAQ:), 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 high court in 2022 blocked another industry-backed ballot measure similar to this year’s over a provision it deemed unrelated to the proposal.

To hedge its bets this time, supporters gathered signatures for five versions of the ballot question, only one of which it would put before voters on Nov. 5.

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.

Opponents of the industry-backed proposals include the AFL-CIO and argued they wrongly seek to have voters weigh in on not one policy question but a series of separate areas of employment law that could not legally be 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.”

Conor Yunits, a spokesperson for the industry-backed campaign, in a statement called the ruling “a huge win and a great day for rideshare and delivery drivers.” Final signatures for the ballot measure will be turned in July 2.