Mass. AG’s suit vs. Uber, Lyft survives motion to dismiss

Massachusetts Attorney General Maura T. Healey’s lawsuit against Uber and Lyft will continue after a judge on March 25 denied the ride-hailing companies’ request to toss the case, keeping in play the chances of an industry-shifting ruling about driver classification.

Massachusetts Superior Court Judge Kenneth W. Salinger allowed Healey’s lawsuit to proceed, ruling that she has standing to ask a court to declare drivers for Uber and Lyft to be employees who have wage and benefit protections under state law.

The ultimate outcome of the case remains undecided, and the court will next hold a scheduling conference on April 14.

Healey sued Uber and Lyft in July, alleging that the companies have boosted their profits and violated state labor laws by deeming drivers contractors instead of employees who could access key employment benefits.

Both Uber and Lyft argue that their workforce prefers the flexibility of being contractors, pointing to industry surveys finding most drivers would prefer to stay independent.

The case could have massive implications for ride-hailing services, hundreds of thousands of Massachusetts drivers, and the so-called “gig economy” more broadly. As Salinger noted in his ruling, both Uber and Lyft have indicated that being ordered to classify drivers as employees could dramatically alter their business models.

“Lyft has confirmed that this controversy is not merely hypothetical, stating in its memorandum of law that a finding that its Massachusetts drivers are employees ‘would require a root-and-branch reinvention of Lyft’s business,'” Salinger wrote. “Uber similarly states that such a declaration would “fundamentally reshape” the relationship between Uber and its drivers.”

The 9-page decision is Healey v. Uber Technologies, Inc., et al.