The Gig Economy Fights Back​

By Robyn Ma​
The Story
Uber and Lyft are two of the companies lobbying to place a bill on next year’s ballot in Massachusetts. This bill proposes to label drivers as independent contractors, rather than employees.

The bill also offers wage promises and “at least $0.26 per mile to cover vehicle upkeep and gas” (Reuters). The measure would require companies to offer healthcare benefits to drivers that work at least 15 hours each week.

But opponents of the bill say these companies are looking to avoid paying tax and shy away from their responsibilities under Massachusetts law. Chair of the Boston Independent Drivers Guild has called this an “exploitation” of gig economy workers (Jalopnik). If approved, voters will decide on the measure in November 2022.

What It Means For Businesses And Law Firms
The classification of gig workers as contractors or employees is an ongoing legal debate. Labour activists claim rideshare companies do not offer fair wages, healthcare benefits, and unemployment insurance to drivers (New York Times).

Others argue that the flexibility enjoyed by workers means they must be classified as contractors. A spokesperson for Uber has argued that an “overwhelming majority of app-based workers want to stay independent” (Reuters). This debate came to a head last year when the state of Massachusetts sued Uber and Lyft for allegedly misclassifying drivers as independent contractors (New York Times).

The push against the reclassification of drivers as employees may have been inspired by last year’s Prop 22, exempting drivers from a Californian law that sought to classify them as employees (Jalopnik). It ensures drivers are treated as independent contractors while provided with limited benefits such as minimum wage. Uber and Lyft stocks bounced up by 11% in response (BBC).

Gig economy companies have snowballed into billion-dollar businesses on a business model that classifies drivers as contractors. Without having to offer employee benefits to drivers, these companies have been able to cut down on costs and avoid paying certain taxes. Indeed, industry officials estimate that reclassifying drivers as employees would increase costs by 20 to 30 percent (New York Times).

This legal battle is not isolated in America. Recently, the UK Supreme Court upheld a ruling classifying Uber’s drivers as employees entitled to minimum wage and holidays (BBC). Further, should HMRC classify Uber as a transport provider, they would have to pay VAT on fares. The company would then be liable for “more than £1bn in VAT and interest” (BBC). Evidently, a win for gig economy companies in Massachusetts would send reverberations throughout the industry, cementing their existing business model.

As more legal battles come into the fore over the nature of workers' rights, employment lawyers will be instructed to advise companies and drivers. In its Supreme Court battle earlier this year, DLA Piper represented Uber, while Leigh Day advised more than 2,000 clients, including Uber drivers.

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