Facing a lawsuit from the state attorney general over how they classify drivers, Uber and Lyft secured a landmark change to California labor law with passage of a heavily funded ballot question that could be a crucial step toward reshaping how cornerstones of the gig economy operate across the nation.
Just two days after the election, Uber CEO Dara Khosrowshahi said that the company would “more loudly advocate for new laws like Prop 22” — which effectively rewrites California state law to exempt ride-hailing and delivery companies from a requirement to classify drivers as employees — moving forward.
In Massachusetts, where Uber and Lyft face a similar lawsuit to the one in California, the next nine months will likely determine to which route the companies take.
Uber says it does not currently plan to pursue a Massachusetts ballot question in 2022, even though the Bay State has a similar trio of requirements, commonly referred to as an “ABC test,” in its labor laws outlining when companies must treat workers as employees rather than contractors.
Instead, the company believes it can secure the relevant changes to state law — clear permission to categorize drivers in a “third” category as independent contractors, rather than as employees — by working with state lawmakers and Gov. Charlie Baker.
“We are confident that, unlike California, Massachusetts leaders will work together to ensure that drivers are able to gain new protections and benefits while keeping the flexibility they overwhelmingly want,” Alix Anfang, an Uber spokesperson, said in a statement to the News Service.
Lawmakers over the years have periodically engaged in heated debates over the independent contractor law.
DoorDash, another one of the giants that pumped money into the successful California campaign, hinted that it, too, might turn toward lawmakers for a solution.
“Prop 22 passed in California because it’s what Dashers and other drivers want,” DoorDash spokesperson Campbell Matthews said in a statement. “We’re committed to working with legislators across the country and leading the way on innovative solutions everywhere, and are confident that Massachusetts policy makers will prioritize the voices of drivers and find a third-way that protects independence and extends benefits.”
Advocacy in Massachusetts has already started. Last week, Mothers Against Drunk Driving New England Executive Director Bob Garguilo wrote to the Baker administration urging leaders to adopt a Prop 22-like reform at the state level, describing ride-hailing companies as an important component to reducing the risks of drunk or impaired driving.
“Today we have one of the lowest arrest rates for DUIs in the country,” Garguilo wrote to Public Safety Secretary Thomas Turco. “Much of that success is the result of the tireless work of law enforcement and community groups, but it is also due to increased access to ridesharing. Massachusetts residents, especially in places with limited access to mass transit, can now easily leave their keys at home when they go out. We can not take a step back.”
“It shouldn’t come to a ballot question for the leaders in Massachusetts to listen to the will of the people, support our workers, and act to keep our roads safe,” he concluded. “We urge you and all public safety leaders across the Commonwealth to support a common sense solution that does just that.”
In May, California Attorney General Xavier Becerra sued Uber and Lyft alleging that they violated a new state employment law often referred to as AB5. That law implemented a three-pronged test — similar to the one in place in Massachusetts — to determine whether companies need to treat their workers as employees who have access to benefits and guaranteed minimum wages.
A state judge in August ordered Uber and Lyft to reclassify their drivers as employees, criticizing their “brazen refusal” to comply with the new state law.
The companies argued that their drivers largely wanted to maintain the flexibilities of independent contractors, pointing to an industry blogger’s polls and warning that the economic disruption amplified by the pandemic could be dire.
They also continued their efforts to secure changes outside of court, joining with fellow app-driving companies such as DoorDash to spend more than $200 million advocating for passage of the ballot question that would rewrite the law in their favor.
The fight drew attention from across the country, even prompting then-Democratic presidential candidate and now-President-Elect Joe Biden to oppose the ballot question in May.
Prop 22 ultimately passed by a margin of more than 17 points.
In Massachusetts, Attorney General Maura Healey filed her own lawsuit against Uber and Lyft in July, arguing that the companies violate wage and hour laws — and boost their profits — by classifying the state’s nearly 200,000 transportation network company drivers as independent contractors.
Healey’s office did not comment on the California results or on what they could spell for Massachusetts, reiterating only that the lawsuit against the companies is ongoing.
Uber, Lyft and other companies still have time to pursue a ballot question, particularly if the talks they aim to have with elected leaders break down. To launch an initiative campaign with the goal of a vote in November 2022, 10 supporters would need to file a petition by the first Wednesday in August of 2021.
Lyft was less clear about its plans in Massachusetts. In response to a request for comment about the Bay State, a company spokesperson only provided a press release praising Prop 22’s passage and describing it as “a groundbreaking step toward the creation of a ‘third way’ that recognizes independent workers in the U.S.”
Despite Uber’s optimism, Beacon Hill power players offered little indication to the News Service that they are on board.
Asked for comment, Sen. Patricia Jehlen, a Somerville Democrat who co-chairs the Labor and Workforce Development Committee, criticized the companies for not participating in a legislative hearing last year.
“We certainly would have welcomed the input of Uber and other rideshare companies this session when we held a hearing in June 2019 on rideshare employee rights, but they chose not (to) attend nor provide comment on those proposals,” Jehlen said in a statement. “We’ll review any initiative petition when it comes before the Labor Committee or the legislature in light of the long standing practice of the commonwealth to protect workers from abusive labor practices like misclassification.”
Baker’s office said only that he would review any legislation that reaches his desk, while neither chair of the Transportation Committee — Rep. William Straus and Sen. Joseph Boncore — commented on Prop 22.
(Copyright (c) 2021 State House News Service.