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Massachusetts Justices Reject Uber-Backed Ballot Initiative (1)

June 14, 2022, 2:52 PMUpdated: June 14, 2022, 7:02 PM

A Massachusetts ballot initiative bankrolled by Uber Technologies Inc., Lyft Inc., and DoorDash Inc. to cement their workers’ status as independent contractors will not move forward, the state’s Supreme Judicial Court ruled.

The proposed ballot initiatives contain at least two “substantively distinct policy decisions, one of which is buried in obscure language at the end of the petitions,” the state justices said Tuesday in a unanimous decision. Attorney General Maura Healey’s (D) certification of the proposals for the ballot therefore was wrong, they said.

A coalition of worker advocates and drivers had challenged the certification of the proposals, contending they violate the state’s constitution because the questions posed 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 put the questions to a vote in November, mirroring a campaign in California that pushed for a similar proposal.

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 to a task. But their employment status as contractors and not traditional employees would be enshrined into state law.

Both California and Massachusetts use what’s known as the 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 on behalf of the state.

Healey said she respects the court’s decision on the ballot question and “will continue our efforts to force Uber and Lyft to comply with Massachusetts employment law and to ensure rideshare drivers have the same rights as all other employees,” according to an emailed statement provided by her office.

The “Massachusetts is not for sale” coalition, which opposed the ballot question, criticized it as a ploy by the tech industry to enrich its shareholders at the expense of drivers’ legal rights.

“We commend the court for getting it right on this issue and we will remain vigilant and united against any further attempts by Big Tech to water down worker and consumer protections in Massachusetts or beyond,” Wes McEnany, campaign director for the coalition, said in a written statement.

Legislative Efforts

While the ballot question’s supporters were disappointed it won’t move forward this year, they’re also pushing for action in the Massachusetts legislature. One pending proposal, H. 1234, would have a similar effect of designating app-based drivers as independent contractors while extending certain benefits that are typically available only to employees, such as funding for retirement accounts, on-the-job accident insurance, and anti-discrimination protections.

“I’d like to think the legislature would recognize that public opinion generally supports drivers’ desire for flexibility,” said Adam Kovacevich, CEO of the Chamber of Progress, a tech-industry policy group.

He pointed to surveys, the outcome of California’s gig-worker ballot question in 2020, and the recent passage of ride-share driver legislation in Washington state as evidence of growing support for keeping drivers classified as independent while providing certain workplace benefits.

“I wouldn’t be surprised to see more states follow Washington state’s lead, particularly if labor is at the table negotiating,” he said.

A local Teamsters affiliate helped negotiate and supported the Washington bill that was enacted earlier this year, although national leadership at the union spoke out in opposition to the measure just before Gov. Jay Inslee (D) signed it.

“The future of these services and the drivers who earn on them is now in jeopardy, and we hope the legislature will stand with the 80% of drivers who want flexibility and to remain independent contractors while having access to new benefits,” the industry-backed coalition Flexibility & Benefits for Massachusetts Drivers said in a written statement.

Limit on Accident Liability

During arguments in May, the Massachusetts justices said voters may not realize that casting a ballot in favor of the initiative shields app-based companies from third-party liability for accidents.

In Tuesday’s decision, the court didn’t formally rule on whether Healey properly informed voters about the proposals, but said in a footnote that “the failure to even discuss” the provisions on third party tort recovery “would have rendered the summaries unfair.”

The court drew “a hard line against initiatives that attempt to mislead voters, as this one clearly did,” plaintiffs’ attorneys Patrick Moore of Hemenway & Barnes LLP and Thomas Bean of Verrill Dana LLP said in an emailed statement. “We welcome the Court’s instruction that where supporters of a ballot question propose policies to the voters—and particularly ones that deprive the public, workers, and those injured of their rights—they must explain those policies clearly, rather than burying them in obscure language in the hope they go unnoticed.”

The case is El Koussa v. Attorney General, Mass., No. SJC-13237, 6/14/22.

(Updated with additional reporting throughout.)

To contact the reporters on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com; Chris Marr in Atlanta at cmarr@bloomberglaw.com

To contact the editors responsible for this story: Genevieve Douglas at gdouglas@bloomberglaw.com; Laura D. Francis at lfrancis@bloomberglaw.com