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Lyft drivers denied emergency motion seeking to be reclassified as employees entitled to sick pay

By Tulay Turan, J.D.

Regarding the health of Lyft passengers and the general public, although the court agreed that a further purpose of sick time is to help decrease the spread of disease, the potential harm to the public is not the same as harm to the drivers themselves.

Lyft drivers who worked in Massachusetts were denied a request for an emergency preliminary injunction requiring the ridesharing company to classify them as employees instead of independent contractors so they could receive sick pay under the state’s earned sick time law. A federal district court in Massachusetts held that even though the drivers had a substantial likelihood of success on the merits of their misclassification claim, they failed to show irreparable harm because Lyft was not the legal cause of any harm and because the potential harm of sick drivers going to work was to the public, not the drivers themselves (Cunningham v. Lyft, May 22, 2020, Talwani, I.).

Second injunction sought. Four Lyft drivers brought a putative class action on behalf of themselves and similarly situated individuals in Massachusetts who drive for the ridesharing company. In a previous proceeding, the court denied the drivers’ request for a preliminary injunction requiring Lyft to classify them as employees instead of independent contractors for purposes of the Massachusetts Wage Act’s minimum wage and overtime requirements. The court also denied Lyft’s motion to compel arbitration and Lyft appealed. In light of the extraordinary circumstances caused by the COVID-19 pandemic, the drivers filed an emergency motion for a preliminary injunction regarding their classification. Because the motion was filed as an emergency motion based on the current health crisis, and because the court had previously considered and denied the drivers’ motion for broader relief, the court indicated it would treat this emergency motion as seeking classification of drivers as employees for purposes of paid sick time only. Also before the court was Lyft’s emergency motion to stay pending appeal.

Court has jurisdiction. As a threshold matter, the court found it had jurisdiction to rule on the drivers’ preliminary injunction despite Lyft’s pending appeal. The court denied Lyft’s motion to stay all proceedings but granted the stay with respect to Lyft’s obligation to answer the third amended complaint and respond to discovery.

Misclassification argument likely to succeed. Turning to the drivers’ motion, the court found the drivers had a substantial likelihood of success on the merits on their misclassification claim. Applying Massachusetts’s independent contractor law, the court found Lyft could not establish one of the law’s three criteria to rebut the presumption of employment. Lyft could not show the drivers’ service was performed “outside the usual course” of Lyft’s business. Despite Lyft’s careful self-labeling as a “platform service,” the realities of Lyft’s business encompass the transportation of riders. In fact, Lyft holds itself out to the public as a transportation company. In addition, Lyft controls many central aspects of the rides from performing background checks on drivers and continuously tracking their actions to setting the price of rides and restricting methods of payment.

The court also found that Lyft equips drivers with tools to provide Lyft’s ridesharing services to riders and earns a percentage of proceeds from those rides. Lyft is directly dependent on the drivers’ services. It sets riders fares and collects fees and commissions on each ride. As a result, Lyft’s revenue is directly contingent on how much drivers drive. Thus, applying the independent contractor law would not expand the boundaries of Lyft’s business but merely ensure that Massachusetts wage, overtime and sick time law applies to the drivers who perform the services that Lyft’s business provides to riders.

Balance of equities. The court also found the balance of the equities favored the drivers. The court rejected Lyft’s argument that classifying the drivers as employees would destroy the flexible schedule model. Nothing in the relief sought by the drivers would interfere with drivers’ flexible schedules. The independent contractor law does not require fixed schedules. In addition, a determination that drivers are employees for purposes of the paid sick time benefits sought by the drivers would require Lyft to provide limited sick time. As the court found the drivers have a substantial likelihood of success on the merits of their misclassification claim, and as Lyft has come forward with no meaningful harm from providing the requested sick leave benefits, the balance of the equities favored the drivers.

Strong public interest. The court also found, based mostly on the amicus curiae brief from the attorney general, that there was a strong public interest in the classification of workers and in workers’ access to paid sick time. Misclassification is prevalent in the transportation industry and contributes to the improper denial of access to sick time and other benefits. It also imposes significant financial burdens on state and local governments due to lost tax and insurance revenues. In addition, Lyft drivers are performing an essential function during the pandemic, but without access to sick leave, it is more difficult for them to receive needed medical care for themselves or family members and more difficult to protect the public from the spread of disease.

Potential harm to public, not drivers. Finally, the court found the drivers had not shown they faced irreparable harm if they were not immediately reclassified so they may receive sick pay under Massachusetts earned sick time law. The drivers argued their own health was endangered by driving when sick. However, the court could not find that Lyft was the legal cause of any such harm. Lyft has not threatened to terminate drivers if they do not drive and has instructed them not to drive if they are sick. The drivers cannot establish that Lyft “caused” them to decide to drive while sick. In addition, the drivers failed to offer evidence that driving while sick will endanger their own health.

Regarding the health of Lyft passengers and the general public, although the court agreed that a further purpose of sick time is to help decrease the spread of disease, the potential harm to the public is not the same as harm to the drivers themselves. Thus, the drivers failed to show that the unavailability of paid sick leave amounts to irreparable harm to the drivers and, thus, the court denied the emergency motion for a preliminary injunction.