Uber & Lyft Snagged by 20-Year Old Massachusetts Law

Massachusetts hit two of the world's largest ride-hailing platforms with gigantic penalties at the end of June.

The Massachusetts Attorney General accused Uber and Lyft of "misclassifying" individual drivers using their platforms. Drivers use the platforms to find riders needing a ride from one place to another. After a four-year struggle consisting of investigations, a court case and post-verdict negotiations, the Attorney General's Office extracted an enormous settlement agreement from the companies: $175 million dollars cash in penalties and lifetime compliance obligations.

The AG's case rested entirely on the 20-year old wording of the nation's most stringent anti-independent contractor statute, short-hand reference Mass General Laws, Chap. 149, Section 148B(a). This text is often referred to in labor law as the ABC Test. The Massachusetts statute is shown in the sidebar below. The ABC Test has deceptive intent, a dubious legislative history, and a completely negative economic impact.

As New Jobs President Mike Hruby wrote in a Wall Street Journal letter-to-the-editors in 2019, "This law harms everyone it touches."

New Jobs has written a full report on this law (text link here) and publicized the law's damaging effects in numerous social media posts (on X platform, under @venturemike1 and @newjobsamerica).

This settlement appears at this moment to be the biggest penalty assessed any buyer of independent contractor services. The damage will be felt nationally by individuals in all occupations and firms in virtually all sectors.

New Jobs will have more news on this settlement and its impact nationwide and economy wide.