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Massachusetts Gig Work Ballot Initiative Sets Up Clash in Court

May 3, 2022, 9:50 AM

A Massachusetts state court case challenging a ballot initiative to cement gig drivers’ status as independent contractors spotlights the strategy that will continue to act as a blueprint fueled by millions of dollars from gig economy giants like Uber Technologies Inc., Lyft Inc., and DoorDash Inc.

The Massachusetts Supreme Judicial Court is scheduled to hear oral arguments Wednesday in the challenge to the ballot initiative, which gig companies see as a way to validate their business models that rely on independent contractors rather than employees for the bulk of their workforces.

Lyft, DoorDash, Uber, and Instacart already have funneled millions into the effort and have collected more than 80,000 signatures to get the questions on the November 2022 ballot. The coalition the companies are backing, Flexibility and Benefits for Massachusetts Drivers, has $17 million in donations so far, including a record $14 million donation from Lyft alone.

By comparison, the union and worker advocate group that’s fighting the initiative, the Coalition to Protect Workers’ Rights, has raised $930,000.

The battle—which mirrors a $200 million campaign bankrolled by gig companies in California—reflects the question the companies face over worker classification across the country.

The case has drawn wide interest on both sides of the issue, including the U.S. Chamber of Commerce, civil rights organizations, and from Democratic members of Congress such as Sen. Elizabeth Warren (Mass.) and Rep. Ayanna Pressley (Mass.).

Contractors With Perks

Under the ballot proposals, ride-hail and delivery app drivers would be promised perks such as health-care stipends and guaranteed minimum pay for time spent assigned a task. But their employment status as contractors and not traditional employees would be enshrined in state law.

Massachusetts Attorney General Maura Healey in September allowed the ballot-measure proponents to begin gathering signatures on proposals that they hope will go before voters in November.

A coalition of worker advocates and drivers challenged the move, arguing that Healey shouldn’t have certified the proposals because they violate the state’s constitution. One question contains unrelated subjects, and they both fail to inform voters about what the proposal would do, the advocates say in their lawsuit.

The attorney general is defending the certification, as well as a group of app-based drivers who support the initiative.

Neither the Attorney General’s Office nor attorneys representing the the ballot initiative challengers responded to requests for comment.

Parallel Suit

The initiative comes as Healey, a Democrat running for governor, is suing Uber and Lyft for allegedly misclassifying its workers as contractors. Like California, Massachusetts uses a rigid standard known as the ABC test to determine whether a company can classify workers as contractors. The case so far has survived a motion to dismiss.

Drivers and their advocates see the ballot initiative as a way to circumvent state law.

“The ballot language from Uber and Lyft is a $100 million ploy to avoid paying taxes, avoid paying workers fairly, and allow Big Tech companies to buy their way out of the basic obligations of every other business,” Beth Griffith, an Uber driver and spokesperson for the coalition opposing the measure, said in a statement.

The gig companies’ coalition, however, is confident the judge will allow the initiative to move forward, spokesman Conor Yunits told Bloomberg Law. Challenges to proposed ballot initiatives are common, and drivers have been clear that they want to remain contractors for the flexibility, he added.

The Massachusetts legislature also is considering bills with the same aim as the ballot initiative. In March, a state House committee held a more than seven-hour hearing that drew more than 200 app-based drivers and other observers.

“The hearing showed how many drivers support the measure, and allowed the state lawmakers to personalize the ideas of flexibility that isn’t found in any other industry,” Yunits said.

Stakes Outlined

The app-based companies are pushing for a repeat of their win in California on a similar measure known as Proposition 22. That initiative was held unconstitutional in state court, but appeals of that ruling remain pending.

Prop. 22 was widely seen as a test of gig companies’ strategy to cement independent contractor status after California implemented a rigid standard for worker classification.

Lyft has lobbied hard to defend its business model, spending $63 million in contributions to mostly statewide candidates and committees since 2016, according to OpenSecrets. Of that, $49 million went to the ballot measure committee on California’s Prop. 22.

Uber gave a total $61 million to statewide candidates and committees since 2016, with $59 million going toward Prop. 22.

The case before the Massachusetts high court has drawn briefs from the U.S. Chamber of Commerce, the National Women’s Law Center, the AFL-CIO, and others.

The U.S. Chamber told the court that gig work provides millions of people the opportunity to own their own business and set their own hours. The Massachusetts regulatory approach could help set parameters around the gig model, the organization said in a brief.

The National Women’s Law Center and other civil rights organizations said the initiative has gender and race implications, as women and people of color make up the majority of many of the app-based companies’ workers, especially after the pandemic.

“Women, particularly women of color, will be on the front lines of harm,” Sarah David Heydemann, the NWLC’s senior counsel for education and the workplace, said in the organization’s brief.

Labor groups argued that the way the ballot initiative is presented confuses multiple issues and doesn’t give voters a clear choice. The ambiguous wording of the initiatives will ultimately lead to companies slashing costs by avoiding the benefits of employment.

If the ballot initiative is allowed to move forward, the Massachusetts legislature has a chance to approve proposals for the ballot without the measure going to voters. If it doesn’t act by Wednesday, then more signatures need to be collected, in this case by July.

The Attorney General’s Office is defending the certification of the ballot initiative. Verrill Dana LLP represents the drivers bringing the challenge. Foley Hoag LLP represents the group intervening to also defend the initiative.

The case is El Koussa v. Attorney General, Mass., No. SJC-13237.

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Laura D. Francis at lfrancis@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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