Battle Over Status of Uber and Lyft Drivers Returns to the Ballot Box

Ride hailing and delivery companies including Uber and Lyft will try this fall to extend their streak of victories over labor groups, with a state ballot measure that would let them treat drivers as contractors rather than employees. But convincing voters might be harder now than in previous years.

The app-based companies are turning to Massachusetts voters in November in the hopes of staving off a lawsuit from the state’s attorney general over the legal status of their drivers.

This fall’s fight over the ballot measure could show how much sway the tech giants have with the public. The app-driven services have long appealed to their customers to avoid the kind of restrictions many other businesses face, most recently in 2020 when California voters overwhelmingly approved a ballot measure pushed by the companies.

But the costs of ride-hailing services are climbing, and public attitudes towards their perennial foes, the labor unions, are at their highest point in half a century. The liberal leanings of Massachusetts, where Democrat Joe Biden got twice as many votes as Republican Donald Trump in 2020, could also make it harder for ride-hailing companies to sway voters, as Democrats are less sympathetic to the industry’s approach than Republicans.

The industry-backed initiative in Massachusetts would specify that the drivers are contractors, rather than employees. That would mean the drivers wouldn’t benefit from many workplace protections required by state law, including minimum wages, overtime pay and earned sick time. Instead, the initiative sets out separate conditions for drivers to earn an alternative minimum wage, sick time and health insurance stipends.

“The future for rideshare drivers, the communities, small businesses and consumers that depend on them is at stake,” said Conor Yunits, a spokesperson for Flexibility & Benefits for Massachusetts Drivers, the group pushing for the measure.

Drivers, he claims, have told the group that they don’t want to be classified as employees, because they don’t want to follow a set schedule or report to a boss.

But the opposition, a coalition that includes labor unions, said the ballot measure is about treating workers fairly.

“Fundamentally, they’re violating the law,” said Wes McEnany, the campaign director for Massachusetts Is Not for Sale, which opposes the measure. “The attorney general is suing them, and they’re going to lose. Now they’re trying to pass a scam ballot initiative to legalize their illegal business model by misleading voters and spending $100 million to do it.”

Fights Around the Country

Ride-hailing companies have long turned to public pressure to halt government regulation, although they haven’t always been successful.

Uber famously beat back an attempt in 2015 to limit the number of for-hire vehicles in New York City with the help of celebrities and specialized features in its app. Three years later, though, the city imposed vehicle caps. 

Uber and Lyft asked voters in Austin, Texas, to overturn a city requirement to make drivers undergo criminal background checks. The companies pulled out of the city after they lost, only to come back several months later when state lawmakers nixed the requirement.

The 2020 California ballot measure came a year after the state legislature tried to tighten the rules governing “gig workers,” or independent contractors that did substantial work for the same company. Uber, Lyft, Instacart, Postmates and DoorDash all supported Proposition 22, which would have exempted companies like theirs from the new law, setting up the most expensive ballot measure campaign in state history.

Nearly 59% of California voters supported the measure, but a judge ruled it was unconstitutional and blocked it from taking effect. The companies are appealing that measure.

Faced with a similar showdown in Washington state, the ride-hailing companies and local drivers instead hammered out a compromise in the legislature there. The new law guarantees drivers a minimum amount of pay and lets them qualify for certain benefits and for workers compensation. The law does not address whether drivers are employees or contractors.

The current Massachusetts dispute, though, has been years in the making. Attorney General Maura Healey sued Uber and Lyft in 2020, alleging that they violated state labor laws. While that case winds its way through the courts, the companies started the process of putting their proposal on the ballot later this year.

The Massachusetts Supreme Judicial Court is considering a challenge to the ballot measure, alleging that the proposal is too broad. But if the judges allow it to go forward, the question could go before voters this fall when Healey, a Democrat, could be on the ballot in a bid for governor.

What’s Best for Drivers?

Proponents of the Massachusetts measure say it will preserve the arrangements that drivers have come to depend on.

People drive for the ride-hailing and delivery services for many reasons, but flexibility is one of the biggest selling points, Yunits said. Grandparents might choose odd hours to be with the grandchildren, or people with disabilities or chronic illnesses might choose to work depending on when they’re feeling well enough.

“In a normal job, they’d be calling out sick four or five days a week, and they don’t have to do that now,” he said. “That kind of flexibility does not exist anywhere else. There is no other job you can have where you can call out sick five out of seven days.”

The ballot measure would also require “engaged drivers” to make at least $18 an hour in 2023, which will be above the state’s minimum wage of $15 an hour. Drivers who spend more than 15 hours a week with customers will also qualify for a 50% subsidy for health insurance through the state exchange, or they can get 100% if they drive for more than 25 hours a week.

The drivers could also qualify for benefits like paid sick time and medical leave, as well as insurance for injuries they sustain while driving. Drivers would also have an appeal process if they were deactivated.

Many of the ballot measure’s provisions are similar to the arrangements in Washington state and California’s Proposition 22. Yunits said Washington state’s new law, and the process of compromise that shaped it, would be a model for other states, including Massachusetts.

“It’s a great example of all different parties – drivers, labor companies, legislators – coming together to pass a solution that works for drivers. That’s what we’ve been asking for here in Massachusetts. We’re confident that’s what voters will deliver in November,” he said.

But McEnany, the organizer for the opponents, said the ballot measure could undermine one of the strongest state labor laws in the country.

He argued that the proposal would do nothing to address scheduling flexibility, which isn’t included in the ballot measure’s provisions. “The companies are essentially threatening to take away flexibility if they have to pay drivers more money,” he said. 

The businesses could also give drivers the benefits they are promising at the ballot box by classifying them as employees, McEnany said.

McEnany questioned why the companies would only consider the hours that drivers were “engaged” with riders or deliveries to qualify for benefits, which essentially means that they don’t accrue minimum pay or benefits while they are waiting for customers. (Yunits said many drivers use several apps, so it doesn’t make sense to pay them for time they are working for another service.)

While ride hailing companies succeeded in California, another deeply blue state, McEnany said the labor groups and other opponents of the Massachusetts measure are in a better position there. Civil rights groups and much of the political establishment are lined up against the proposal, he said.

In the California campaign, he said, opponents of Proposition 22 got “trapped” responding to the industry’s arguments. When the industry would show a driver arguing for the measure, the opponents would show a driver who opposed it. But the problem was that the ride hailing companies vastly outspent the opponents, he said.

“We want to broaden the narrative and talk about all the things these companies are doing,” McEnany said. “There is something different in the climate. Uber and Lyft offered all these surge benefits so drivers could make good money, but since they took over the market … they’ve also stripped away all of the money that drivers could make.”

“Drivers are getting paid less and consumers are paying more,” he said.