Proposed Massachusetts Law Classifying App-Based Drivers as Independent Contractors Clears First Step of Ballot Initiative Process

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On September 1, 2021, Massachusetts Attorney General Maura Healey approved two versions of a ballot initiative (version 1, version 2) concerning the relationship between app-based drivers (such as those who transport passengers or deliver food) and the companies with which they contract. If passed, the ballot initiative will enact the Relationship Between Network Companies and App-Based Drivers Act (the “Act”) and classify such drivers as independent contractors, not employees. It will also require ride-sharing and food-delivery companies to provide them with certain benefits.

Like most companies, ride-sharing and food-delivery companies operating in Massachusetts must satisfy M.G.L. c. 149, § 148B’s “ABC test” to show that a worker is an independent contractor. The ABC test provides that workers are independent contractors only if their putative employer demonstrates that they are not subject to the company’s “control and direction,” perform work “outside the usual course” of the company’s business, and are “customarily engaged in an independently established trade, occupation, profession or business.”

Under the Act, however, app-based drivers would be independent contractors if they are not required to work on certain days, at specific times, or a set number of hours; are free to reject requests for rides or deliveries; and are not restricted from working in any other lawful line of work, including working for other app-based transportation and delivery companies (except while actively performing transportation or delivery services using a particular company’s app).

While the Act would classify app-based drivers who meet these criteria as independent contractors, it will also provide them with benefits typically reserved for employees. Specifically, companies would have to provide app-based drivers with at least 120% of the applicable minimum wage, a healthcare stipend, paid sick time, paid family and medical leave, occupational accident insurance, and paid occupational safety training.

Less than a year ago, Californians voted to approve similar measures in their state (although a California state court has recently ruled that the California initiative was unconstitutional).

Before Massachusetts voters will have the same opportunity next November, the Act will have to go through additional steps, such as collecting just over 80,000 signatures, being submitted to the General Court, and if the General Court declines to act on it, collecting roughly 13,000 more signatures.

We will monitor activity on the Act and update this post with pertinent developments.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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