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Uber, Lyft-Backed Gig Initiative Meets Wary Massachusetts Court

May 4, 2022, 6:06 PM

Massachusetts voters may not realize casting a ballot in favor of an initiative that cements gig workers’ status as independent contractors could shield app-based companies from liability for accidents that involve third parties, several of the state’s high court justices suggested at a hearing Wednesday.

The Massachusetts Supreme Judicial Court is considering a challenge to a ballot initiative backed by companies including Uber Technologies Inc., Lyft Inc., and DoorDash Inc. that would designate app-based delivery and ride-hailing drivers as independent contractors, while providing some benefits and guarantees for minimum wage.

A coalition of worker advocates and drivers challenged Attorney General Maura Healey’s certification of the proposals for the ballot, contending they violate the state’s constitution because the questions posed to voters include unrelated subjects and fail to inform voters about what the proposal would do.

The ballot initiative represents the latest battleground for the gig companies, who have funneled millions into the effort to get the questions on the November ballot. The coalition the companies are backing, Flexibility and Benefits for Massachusetts Drivers, has collected $17 million in donations so far, including a record $14 million from Lyft alone.

The effort mirrors a $200 million campaign bankrolled by gig companies in California to pass Prop 22. The measure, which passed there in 2020, was ruled unconstitutional by a state trial court. The case is now pending before California’s intermediate-level court of appeals.

Both California and Massachusetts use a so-called ABC test to determine worker classification, which makes it difficult for gig employers to defend business models that rely heavily on independent contractors rather than employees. Healey is separately suing Uber and Lyft for misclassification.

Tort Shield

At Wednesday’s hearing, M. Patrick Moore, an attorney for the challengers, told the justices that the companies backing the initiative are attempting to connect ideas like driver flexibility and freedom with benefits, which may seem appealing to voters but hide that the measure would also be a shield from tort liability. He also said that all terms of an employment relationship are implicit in the classification question, including anti-discrimination and benefits that are given to employees.

“They jam all of these concepts together under the same banner of worker classification,” said Moore, an attorney with Boston’s Hemenway & Barnes LLP. “To link all of these things together is an initiative of a breadth that has never been presented to this court. There is nothing whatsoever like that. No proponent has ever tried to link all these issues in this way.”

Several of the jurists homed in on Moore’s argument that cementing an app-worker’s status as an independent contractor would prevent a third party, such as a passenger, from suing the company if there was an accident.

“The public may feel one way about gig employees and how they are compensated, but they care a lot about accidents with people, and if they are limited to suing the large corporation or the guy with the car to cover their damages,” said Chief Justice Scott Kafker, who questioned both sides on this issue. “Those are two different policy questions. “

Common Purpose

Jesse Boodoo from the Massachusetts Attorney General’s office said the state disagrees with the interpretation that the ballot initiative would create a liability shield for the companies and doesn’t think that concern should block ballot certification.

“One of the issues is that the initiative is not just defining the relationship and rights between the worker and employer, but also between the worker and the rest of the world,” Justice Dalila Wendlandt said, pressing Boodoo on the question of liability to third parties.

Boodoo said the potential consequences of the ballot initiative could be significant if the challengers are correct about liability, but the court has allowed ballot questions to move forward that have consequences to third parties and the public. “Those don’t undermine relatedness if it’s germane to the common purpose,” he argued.

Justice Elspeth Cypher said it’s important for the public to understand what they are voting for.

The ballot questions address fundamental issues about job responsibilities and obligations and what you are paid for benefits that represent a single, common question, said Tad Heuer, an attorney who represents a group of drivers in support of the initiative who are intervening in the case.

Kafker asked him if “the average Joe” would understand the contractor relationship and who would be on the hook in the case of an accident. Heuer, of Foley Hoag LLP, responded that people do understand that nuance.

“Everyone can read the newspaper. Accidents happen all the time,” Heuer responded. “People are well aware there are legal regimes, where people are covered or not covered.”

The case is El Koussa v. Attorney General, Mass., No. SJC-13237., argument 5/4/22.

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

To contact the editor responsible for this story: Andrew Harris at aharris@bloomberglaw.com, Melissa B. Robinson at mrobinson@bloomberglaw.com