The Massachusetts Attorney General, Maura Healey had announced on Tuesday that she would be filing a lawsuit up against the taxi-on demand companies Uber and Lyft in which she claimed both companies to have been improperly misclassifying their drivers as contractors instead of employees just in an attempt to save millions of dollars in compensation.
“We’re suing because these companies have built their billion-dollar business that misclassifies their drivers as contractors,” she said during a morning news conference conducted on Zoom.
The complaint is seeking a declaratory judgement which was submitted to Massachusetts Superior Court in Suffolk County. Healey further added that these tech companies do not pay unemployment or worker’s compensation benefits which in turn allows them to pocket millions of dollars every single year. With that, Uber and Lyft are being sued.
“Taxpayers and other companies are essentially paying when Uber and Lyft misclassifies workers,” she said. “The bottom line is that Uber and Lyft have gotten a free ride for far too long.”
The state of Massachusetts and California are the two states seeking court ruling demanding Uber and Lyft be subjected to legal preceding as they have run afoul of state labor laws.
A legal obligation was put in effect earlier this year in California which is called the AB5 which is meant to allow drivers of these companies be regarded as employees rather than be referred to as independent contractors.
“It’s a big boost that the Massachusetts attorney general is backing up what we’ve been saying for years,” said Shannon Liss-Riordan, a Boston-based attorney who has led numerous lawsuits in both states against the two ride-sharing companies. “This needs to go nationwide, and I am having discussions with members of Congress,” she said.
A Lyft spokesperson CJ Macklin declined to answer specific questions when asked by media outlets but sent an emailed statement which claimed the lawsuit would “eliminate work for more than 50,000 people”
“Drivers don’t want this — most drive only a few hours a week, and they have chosen to drive using Lyft precisely because of the independence it gives them to make money in their spare time,” he wrote. Both companies have strongly resisted the California law and have even spearheaded an effort to pass a new state law that will be presented to voters in November that would effectively overturn AB5 for gig workers.
Forcefully reclassifying workers as “Employees” is said to shatter the fundamentals business models of both Uber and Lyft in the attempt as well as having an adverse effect on the companies profitability based on an annual report which was submitted to the Securities and Exchange Commission back in February and March. With both companies sued, we hope to see how things will gturn out for their mode of operation in other states where they aren’t sued.