State sues Uber and Lyft, saying they cheat drivers by calling them contractors

An Uber Technologies logo on a smartphone.Chris J. Ratcliffe/Bloomberg

The Massachusetts attorney general is suing Uber and Lyft, claiming the ride-hailing companies are misclassifying drivers as independent contractors in violation of a state law that establishes them as employees.

As independent contractors, drivers don’t have the right to the minimum wage, overtime pay, paid sick time, unemployment insurance, and other worker protections that employees are entitled to. Massachusetts law states that workers are employees if their tasks are directed by the company, they don’t have an independently established business, and they perform jobs that are part of the company’s regular course of business.

“Uber and Lyft have gotten a free ride for far too long,” Attorney General Maura Healey said during a press conference Tuesday to announce the lawsuit, filed in Suffolk Superior Court. “For years, these companies have systematically denied their drivers basic workplace protections and benefits and profited greatly from it.”

The ride-hailing companies are facing a similar lawsuit by the State of California, where a law like the one in Massachusetts recently went into effect. The companies have also been involved in private lawsuits over the same issue, including ongoing cases in Massachusetts.

The Massachusetts independent contractor law has been on the books since 2004, but Healey said she is going after the companies now because the coronavirus crisis has put the drivers’ situation in stark relief. Gig workers are being asked to put their lives on the line to provide transportation and make deliveries with few job protections, Healey said. Uber and Lyft started offering paid sick time for drivers in March, but only for those diagnosed with COVID-19 or directed to quarantine. Likewise, drivers weren’t eligible for unemployment benefits until the federal government established a special pandemic-related fund for gig workers.

“What the COVID pandemic has shown is just how many folks are employed in this gig economy who it turns out lack very basic protections and benefits,” Healey said, noting that taxpayers are forced to pick up the tab instead.

Before the pandemic, an estimated 200,000 drivers worked for Uber and Lyft, most of them on a part-time basis.

Felipe Martinez, chairman of the Boston Independent Drivers Guild, said that driving became a “life or death issue” during the pandemic.

“We could either keep driving, risking our own life and our families’ health, or we could stay home and keep our family safe and lose out on income,” he said.

When Martinez, who lives in Andover, first started driving, “I believed the lie,” he said. “I thought I was an independent contractor with my own business.” Now he was come to realize: “I was an employee in disguise.”

For years, businesses have been skirting their obligations to workers by classifying them as independent contractors, but the rise of digital platforms like Uber and Lyft has spurred rapid growth in the practice, said David Weil, dean of Brandeis University’s Heller School for Social Policy and Managementand former head of the Wage and Hour Division at the US Department of Labor under President Obama.

“These models allow businesses really to have their cake and eat it too, and to get all the benefits of control of a workforce and management of a workforce,” he said. “But they sidestep responsibility to those workers.”

As a result, he said, workers earn less, have fewer protections, and don’t have the ability to raise their voice if their rights are violated.

In response to the Massachusetts lawsuit, Uber said most drivers oppose being classified as employees, noting a survey that found 71 percent of drivers want to be independent contractors.

“At a time when Massachusetts’ economy is in crisis with a record 16 percent unemployment rate, we need to make it easier, not harder, for people to quickly start earning an income,” Uber said in a statement. “We will contest this action in court, as it flies in the face of what the vast majority of drivers want: to work independently. We stand ready to work with the state to modernize our laws, so that independent workers receive new protections while maintaining the flexibility they prefer.”

Lyft said that if it is forced to reclassify drivers as employees, drivers shouldn’t assume that they would be hired as employees, or that they would be able to drive whenever they want. Flexible schedules are vital to drivers, Lyft said, many of whom have other full-time jobs. Other drivers have lost their jobs during the pandemic and rely on the extra income.

“Drivers don’t want this — 89 percent of Massachusetts Lyft drivers drive fewer than 20 hours per week and choose to drive rideshare precisely because of the independence it gives them to make money in their spare time,” the company said in a statement.

Tom, a driver from Salem who declined to give his last name, said he would no longer drive for ride-hail services if he were classified as an employee because he would assume that would give the company more power over his work hours.

“I think it’s a horrible idea,” he said. “The big charm to me is I could set my own hours. The flexibility comes from not being an employee.”

Boston lawyer Shannon Liss-Riordan has been going after Uber and Lyft for misclassifying drivers for years in Massachusetts and California, which have the strongest laws, and said the attorney general’s lawsuit is a “big boost” for her cases. Whereas the state is seeking a declaratory judgment that drivers are employees and an order that the drivers are entitled to state wage and hour protections, Liss-Riordan is seeking back pay for workers, both through class-action lawsuits and thousands of individual arbitrations.

Ultimately, employee protections should go beyond state laws, she said. “I think we need to be broadening federal law and making it more protective, like Massachusetts and now California, to make it easier to stop these multibillion-dollar companies that are trying to erode workplace rights throughout the country.”

Jim Lantos, a Waltham-based driver for Uber and Lyft who has provided about 8,000 rides, said the change is needed to ensure fair wages for drivers. Factoring in the time spent waiting for ride requests, as well as costs such as gas and maintenance, ride-hailing can pay less than minimum wage, he said.

“This seems like it is going to wind up in court with a lot of high-priced, very smart attorneys who will argue this out before a judge,” said Lantos, who blogs about the work at his website, BostonAutoTour.com. “But I certainly cannot build a career working for $5 an hour.”