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Massachusetts sues Uber, Lyft over IC misclassification

July 14, 2020

The state of Massachusetts is suing Uber Technologies Inc. (NYSE: UBER) and Lyft Inc. (NASDAQ: LYFT) alleging they misclassify drivers as independent contractors instead of employees, Attorney General Maura Healey announced today.

Healey announced the lawsuit this morning in a news conference conducted on Zoom.

“Uber and Lyft have built businesses on a model that misclassifies drivers as independent contractors instead of employees,” Attorney General Maura Healey wrote on Twitter.” Drivers are not guaranteed to make the minimum wage, don’t get paid overtime, and can’t take paid time off when they and their family members are sick. But Massachusetts law is clear — drivers are employees. We will see Uber and Lyft in court.”

Healy also noted that businesses that misclassify workers don’t pay unemployment taxes or workers compensation like other companies, which means “the taxpayers and responsible employers pick up the tab” when the misclassified workers need unemployment or workers compensation.

“The bottom line is that Uber and Lyft have gotten a free ride for far too long,” she said.

Under Massachusetts law, the drivers are employees, she said. She is seeking a ruling that the drivers are employees under Massachusetts law and a court order granting them access to the rights and protections provided to employees — such as minimum wage, overtime and earned sick time.

The state’s three-part test for independent contractors requires that the worker is free from the company’s direction and control, the services the worker performs are outside the usual course of the company’s business, and the worker is engaged in an independently established business in the same nature as the service performed.

The lawsuit is similar to one filed in May by California’s Attorney General alleging Uber and Lyft are misclassifying their drivers as independent contractors under California’s AB 5 law — the law that took effect Jan. 1 and aims to get tough on independent contractor misclassification.

“It’s a big boost that the Massachusetts attorney general is backing up what we’ve been saying for years,” Shannon Liss-Riordan, a Boston-based attorney who has led numerous lawsuits in both states against the two ride-sharing companies, told NBC News.