A federal court judge in Massachusetts just rejected Lyft’s attempt to escape the reach of Prong B of the ABC Test, indicating it was “likely” that its rideshare drivers are employees and not independent contractors. The news wasn’t great for Lyft, but more importantly, the May 22 decision doesn’t portend well for gig economy companies trying to fit their traditional business model into the strict confines of the ABC Test. For those operating in states where misclassification conflicts are resolved using the test – we’re looking at you, California – this development isn’t the best news, and is definitely worth tracking. Dispute In A Nutshell In the ongoing battle between a class of rideshare drivers and Lyft over their status as contractors or employees, a group of Massachusetts drivers recently filed an emergency request with the court asking to be immediately recognized as employees. Their argument was that this move was necessary in order to secure the employment benefits afforded to employees during the COVID-19 crisis. In order to win the injunctive relief they were seeking, the drivers would need to prove four elements: that they are likely to succeed on the merits of their dispute, that they are likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in their favor, and that an injunction is in the public interest. If there is any good news for Lyft, it’s that Judge Indira Talwani rejected the request for the emergency injunctive relief. She concluded that they could not show that they would be irreparably harmed absent an immediate order. But the bad news came when she wrote her conclusion that the drivers were likely to prevail on the merits of their misclassification dispute, focusing on Prong B of the ABC test. The ABC Test – And Prong B For those uninitiated in modern misclassification standards, several progressive states have adopted what’s known as the “ABC test” to determine whether a worker is a contractor or employee. In states such as California and Massachusetts, a business must prove the following three elements in order to have a valid independent contractor arrangement:
- the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact;
- the service is performed outside the usual course of the business of the employer; and
- the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.