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Written by Nate Raymond
BOSTON (Reuters) – The Massachusetts Supreme 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 legally be employees.
The Massachusetts Supreme Judicial Court rejected a workers’ appeal against an industry-backed coalition’s proposal to entrench drivers as contractors. But she also said she would allow a competing ballot measure that would allow drivers to unionize moving forward.
The decision came ahead of closing arguments scheduled for Friday in a trial in a lawsuit filed by the state’s Democratic Attorney General, Andrea Joy Campbell, accusing Uber and Lyft of misclassifying their drivers as contractors, rather than employees.
If the industry fails in court and at the ballot box, Uber and Lyft could face an overhaul of their business models, an overhaul that lawyers for both companies said could force them to cut or end service in Massachusetts.
Various studies have shown that using contractors can cost companies up to 30% less than the cost of hiring employees.
Uber and Lyft, along with app-based delivery services Instacart (NASDAQ:) and DoorDash (NASDAQ:), have spent millions of dollars to support a ballot proposal that would strengthen their drivers’ status as contractors under state law.
Flexibility and Benefits for Drivers in Massachusetts, a ballot measure committee that includes shareholders from the four ride-sharing companies, also proposes setting a minimum income for app-based drivers and providing them with health care, occupational accident insurance and paid sick time.
They’re pushing it after the industry with a $200 million campaign in 2020 that convinced voters in California to pass a measure similar to the one backed by the companies in Massachusetts, entrenching drivers as independent contractors with some benefits. Lawsuits challenging this measure are ongoing.
The Massachusetts Supreme Court in 2022 blocked another industry-backed ballot measure similar to this year’s measure because of a provision it deemed irrelevant to the proposal.
To hedge its bets this time, supporters have collected signatures on five versions of the ballot question, only one of which will go before voters on November 5.
A separate proposed ballot measure backed by Service Employees International Union 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 have argued that they wrongly seek to persuade voters not of a single policy issue but of a series of separate areas of labor law that cannot legally be brought together.
But Justice Gabriel Wolohojian, writing for the court for a 6-0 majority, said the provisions in even the broadest of the five proposals “share one common goal: to establish and define the relationship between drivers and companies.”
Conor Unites, a spokesman 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 delivered on July 2.
