BOSTON – On a day when dozens of lawmakers voiced opposition to legislation that would overhaul how companies classify and compensate app-based drivers, leaders of the gig economy giants seeking the changes indicated that their business models could not accommodate employee benefits under existing state law.
Higher-ups at Lyft, DoorDash and Instacart faced pointed inquiries from lawmakers on Wednesday about why they are pursuing a bill and an initiative petition that would declare drivers as independent contractors while launching “portable benefit accounts” that could be used for health insurance, retirement and more.
Many of those questions featured some variation of a single point: why can’t popular ride-hailing and delivery app companies keep the worker flexibility they praise in place while offering employee benefits to their drivers?
“There’s really no evidence in the world, in the country and certainly not in Massachusetts that the minute-by-minute flexibility that we’re talking about that’s available on these apps, where drivers can log on and log off, and go work for other apps — that doesn’t coexist with employment anywhere,” Jen Hensley, Lyft’s vice president and head of government relations, told the Financial Services Committee.
After months of gaining momentum at rallies and press conferences, debate about how the companies designate drivers took center stage inside a State House hearing room as lawmakers heard several hours of testimony on legislation the industry’s power players want enacted.
The bill, filed by Rep. Mark Cusack of Braintree and Rep. Carlos Gonzalez of Springfield, is the top priority for the Coalition for Independent Work that Uber, Lyft, DoorDash and Instacart are funding. That group is also pursuing a potential 2022 ballot question that would similarly define app-based drivers as independent contractors and offer benefits under a different structure than the legislation.
Since their inception, most of the widely used transportation network companies and online delivery services have treated their drivers as independent contractors who have flexibility to set their own schedules but cannot access benefits guaranteed to employees.
But Attorney General Maura Healey sued Uber and Lyft last summer, alleging that they are both violating the “ABC test” in state law that defines when an employer can treat a worker as a contractor.
Opponents, which as of Wednesday include 25 senators, 44 representatives, and both finalists in the Boston mayoral election, contend that the legislation and possible ballot question are a corporate attempt to render the lawsuit moot by rewriting state law.
Shannon Liss-Riordan, a labor attorney and former U.S. Senate candidate who worked with drivers, said the companies typically shielded themselves from legal repercussions by pushing cases into arbitration. Now that Healey is pursuing action against the industry, Liss-Riordan said, that option is not available.
“They know that their days are numbered, so what they’re doing is they’re coming here to you and asking you to change Massachusetts law to legitimize what they’ve been doing all these years and not have to provide all the protections and rights that all other employees in Massachusetts have,” Liss-Riordan told the Financial Services Committee.
The Cusack-Gonzalez bill would write into law that app-based drivers are independent contractors and not employees, and it would also require businesses to create “portable benefit accounts” for those workers. Companies would contribute an amount equal to 4 percent of an eligible driver’s quarterly earnings, and drivers could then use those accounts to pay for health insurance or to bulk up a retirement account.
Industry leaders and platform workers who support the existing models say independent contractor status provides a degree of freedom that any employee, even someone working part-time, could not enjoy. Drivers can begin and end their shifts whenever they choose, and they can switch between driving for a single app at will, supporters say.
Marcus Cole, a Boston resident who has driven for Lyft for more than six years, told lawmakers that he was able to support his daughter’s homeschooling and help his elderly grandmother during the COVID-19 pandemic because of the flexibility he has on the app.
“I worked many full-time jobs and set schedules didn’t work for me,” Cole said, adding that he earns “way more” on the platform than any full-time job he held previously. “Lyft allows me to spend time with my family and my daughter that I wasn’t able to do before.”
The Coalition for Independent Work sent lawmakers a petition signed by more than 3,200 drivers in favor of the bill ahead of Wednesday’s hearing. In that document, they said they chose to work in these fields “specifically because of its independence” and do not want to be subject to set schedules or shifts.
“We really encourage you and your colleagues to avoid the traps of paternalism and really listen to the people that will be most impacted by these laws so they can secure the flexibility that they value most,” Hensley told lawmakers.
Asked if their business model could evolve to accommodate workers who want those protections and benefits today, DoorDash head of government relations Toney Anaya replied that the company wants to “explore every option” but remains “confined by the limits of the current law and how the employee-employer relationship is defined.”
“There’s been one consistent theme we’ve tried to bring to the table, and that is: we’re talking about a different type of arrangement between individuals,” Anaya said. “The old models just don’t work for this type of earning opportunity.”
Leaders of both the support and opposition campaigns told lawmakers they have not spoken with the other side about a potential compromise but are open to discussions.
The Coalition to Protect Workers’ Rights, a group of organized labor leaders and community activists fighting the bill and ballot question campaign, does not have an alternative bill primed for lawmakers to consider. Instead, its members want the Legislature to reject proposed changes and ensure existing labor and tax laws are enforced.
“The discussion that these companies want to have, if there were to be a discussion, is how to weaken the rights they currently have under the law,” Liss-Riordan said. “So that’s why we’re asking you to strongly stand your ground.”
It remains unclear whether lawmakers, the courts, or voters will have the final say over how gig economy power players classify drivers. The industry-backed coalition needs to collect tens of thousands of signatures to advance its ballot question.
The Legislature could also opt to take up the bill or a compromise version at any point, though a letter that 25 senators signed in opposition Wednesday — reflecting a majority of the 40-person Senate — signals that the legislation as drafted would likely fall short in at least one chamber.
Healey’s lawsuit against Uber and Lyft remains pending in Suffolk Superior Court. She told lawmakers she could not predict when the court will reach a decision, but hinted it could happen before lawmakers act on the bill or before voters have a chance to weigh in on the potential ballot question.
“It could come in months, it could come within the year,” she said. “It’s hard to predict. We are aggressively pursuing that case in court.”
Joining opponents in advocating against the bill at Wednesday’s hearing, Healey said the proposal would render app-based drivers “second-class citizens who aren’t entitled to minimum wage, overtime, sick time, anti-discrimination law protections and other critical workplace protections.”
“I know that drivers need flexibility to earn income on their own schedule for child care, to help a sick family member, pay tuition, or make sure next month’s rent can be paid,” Healey, a Democrat, said. “But as the chief law enforcement officer and the primary enforcer of state wage and hour laws, I’m here to say that under the law, drivers can have that flexibility and the rights and benefits of employment status, too. We don’t need to set up a second set of inferior, lesser-tier standards just for app-based drivers.”