Tesla Model 3 electric vehicles at a Hertz location.
Uber and Hertz CEOs discuss Tesla partnership
04:20 - Source: CNNBusiness
Reuters  — 

Massachusetts’ top court on Tuesday blocked a bid to ask voters whether app-based ride-share and delivery drivers should be treated as independent contractors rather than employees, in a setback for companies like Uber (UBER (UBER)) and Lyft (LYFT (LYFT)).

The unanimous decision by the Massachusetts Supreme Judicial Court marked a victory for labor activists who sued and argued the ballot measure proposal contained loopholes that would create a sub-minimum wage for drivers for the companies.

The court said a ballot question that a coalition of app-based service providers hoped to put before voters in November went too far by including an unrelated proposal that would limit their liability for accidents by their drivers.

Justice Scott Kafker wrote that by including an unrelated proposal “buried in obscure language,” the measure went beyond defining the relationship between app-based drivers and the companies.

He said that meant Massachusetts Attorney General Maura Healey, a Democrat running for governor, wrongly certified it complied with state constitutional requirements limiting ballot measures to related subjects.

Conor Yunits, a spokesperson for the industry-backed campaign, in a statement called on state lawmakers to stand with the “clear majority” of drivers who supported the proposal and pass legislation.

The Massachusetts Coalition for Independent Work, whose members include Uber, Lyft, Instacart and DoorDash (DASH), last year proposed asking voters to declare their drivers as independent contractors entitled to minimum benefits without treating them as employees.

The initiative called for establishing an earnings floor equal to 120% of the Massachusetts minimum wage for app-based ride-share and delivery drivers, or $18 an hour in 2023, before tips.

The companies would be required to pay healthcare stipends if drivers work at least 15 hours per week. Drivers could also earn paid sick time and paid family and medical leave.

California voters approved a similar industry-backed measure in 2020 that would treat app-based drivers as independent contractors with some benefits, but a judge later ruled it violated the state’s constitution.