Massachusetts Court Rejects Ballot Measures to Make Gig Workers Independent Contractors



​The Massachusetts Supreme Judicial Court recently rejected two proposed ballot initiatives that would have kept gig workers designated as independent contractors and given them some of the benefits that employees receive.

On June 14, the state's top court found that Massachusetts Attorney General Maura Healey should not have certified the signatures on the petitions and that the initiatives can't be placed on the ballot in November because they address more than one policy decision. The two versions were almost identical except Version A required paid occupational safety training for drivers.

App-based platforms like Uber, Lyft, DoorDash and Instacart typically consider their drivers independent contractors who can set their own hours.

The ballot initiatives proposed extra protections for gig workers, including:

• Guaranteed compensation of 120 percent of the Massachusetts minimum wage ($18 per hour in 2023) for time spent completing ride requests, but not time between rides.
• Per-mile expense reimbursement, starting at 26 cents per mile driven.
• A health care stipend.
  
• Paid sick time.
• Paid family and medical leave.
• Accident insurance.
• Protection against discrimination.
• A right to appeal any termination of their contract.
  

Drivers' earnings that fail to meet the minimum compensation amount, not including tips and gratuities, would be plussed up to the minimum threshold.

In July 2020, Healey filed a lawsuit asking the court to rule that all Uber and Lyft drivers are employees under Massachusetts wage and hour laws, which would give drivers access to labor rights, minimum wage, overtime and earned sick time.

In March 2021, a Superior Court judge denied Uber and Lyft's motion to dismiss the attorney general's lawsuit. That case continues to move through the courts.

On Jan. 18, opponents of the ballot initiatives filed a lawsuit with the Massachusetts Supreme Judicial Court, arguing that Healey should not have certified the petitions and that Secretary of State William Galvin should not be allowed to set them before voters.

Ride-hailing and food-delivery companies are fighting to keep their drivers classified as independent contractors. Employers don't have to shoulder the cost of payroll taxes and employee benefits for independent contractors.

California has a law similar to the measure proposed in Massachusetts.

Criteria for Classification

Figuring out how to classify workers isn't always a simple matter.

"It is important to take care in properly classifying workers in Massachusetts, as there can be potentially significant consequences for misclassifying them as independent contractors," said Sean O'Connor, a lawyer with Morgan, Brown and Joy in Boston. "Massachusetts has a stringent three-part test where all three of the factors must be met in order for an individual to properly be classified as an independent contractor."

Under this three-part test, called the ABC test, workers are considered employees unless:

• They are free from the company's direction and control.
• They are customarily engaged in an independent business of the same nature.
• The work takes place offsite or outside the usual course of business for the company.
  

"One of the most common mistakes that is made on this issue is ignoring these requirements and instead assuming that because other companies may classify workers as independent contractors, or perhaps that approach is common in a particular industry, that it is legal to do so," O'Connor said. "Ultimately, the fact that others may be misclassifying workers is not a valid legal defense for you doing so as well."

HR professionals should "think long and hard about whether they want to risk a misclassification," advised Jeffrey Fritz, an attorney with Fisher Phillips in Boston. "The penalties for misclassification can be severe, including tax penalties and automatic treble damages [three times actual damages] on wage and hour violations."

Looking Broader

The proposed ballot initiatives in Massachusetts applied only to drivers, not to other types of independent contractors. It's too early to tell what might happen with independent contractors in various other industries, such as media, entertainment and health care.

"Ultimately, the outcome of this ballot initiative will not have any immediate effect one way or another on independent contractors in other industries," O'Connor said. "They'll remain subject to the same legal standards as they currently are. However, if the ballot measure had been successful, it is safe to assume that it could create momentum for an expansion of similar initiatives for other independent contractors."

The state laws "are a bit behind the times generally, trying to force a 20th century model upon 21st century work practices, mindsets and logistics," Fritz said. "My guess is broader change will have to come through legislative means, not through a ballot question."