Massachusetts 2023-2024 Regular Session

Massachusetts House Bill H4610 Compare Versions

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1	1	HOUSE . . . . . . No. 4610
2	2	The Commonwealth of Massachusetts
3	3	_______________________
4	4	HOUSE OF REPRESENTATIVES
5	5	_______________________
6	6	REPORT
7	7	of the
8	8	SPECIAL JOINT
9	9	COMMITTEE
10	10	on
11	11	INITIATIVE PETITIONS
12	12	on the
13	13	INITIATIVE PETITION
14	14	of
15	15	CHARLES DEWEY ELLISON, III
16	16	AND OTHERS
17	17	FOR THE PASSAGE OF AN ACT
18	18	DEFINING AND REGULATING THE RELATIONSHIP
19	19	BETWEEN NETWORK COMPANIES AND APP-BASED DRIVERS
20	20	FOR CERTAIN PURPOSES OF THE GENERAL LAWS
21	21	(see House, No. 4258)
22	22	_______________________
23	23	April 30, 2024.
24	24	_______________________ MAJORITY REPORT.
25	25	A majority of the Special Joint Committee on Initiative Petitions (“The
26	26	Committee”), recommends that Initiative Petition No. 23-25, House 4256; Initiative
27	27	Petition No. 23-29, House 4257; Initiative Petition No. 23-30, House 4258; Initiative
28	28	Petition No. 23-31, House 4259; and Initiative Petition No. 23-32, House 4260, (“the
29	29	Initiative Petitions”) as currently drafted and presented to this Committee, OUGHT NOT
30	30	TO BE ENACTED BY THE LEGISLATURE AT THIS TIME
31	31	The purpose of this report is to provide a recommendation to the full legislature on
32	32	whether to accept the Initiative Petitions as written for consideration and enactment.
33	33	The five Initiative Petitions would all similarly declare Transportation Network Drivers
34	34	and Delivery Network Drivers (“Drivers”) as independent contractors when engaging
35	35	with Transportation Network Companies and Delivery Network Companies
36	36	(“Companies”). The five Initiative Petitions differ in legal mechanisms to achieve this
37	37	and the scale and scope of the type of benefits Drivers would receive, from no additional
38	38	work benefits to Drivers to creating a new class of benefits for these Drivers.
39	39	Testimony
40	40	The Committee heard from experienced professionals, proponents and opponents, as well
41	41	as members of the general public.
42	42	Patrick Moore, First Assistant Attorney General of the Commonwealth of Massachusetts,
43	43	testified as a subject matter expert on the five Initiative Petitions. First Assistant Attorney
44	44	General Moore gave a brief overview of each Initiative Petition as follows:
45	45	House 4257 and House 4260 were referred to as “bare bones” Initiative Petitions that
46	46	similarly define Drivers as not employees, and Companies as not employers.
47	47	House 4257 specifies that Drivers who accept requests through an online enabled
48	48	application are not employees for purposes of certain Massachusetts labor and
49	49	employment laws, specifically those governing wage and hours, workplace conditions,
50	50	workers’ compensation, and unemployment insurance. The Initiative Petition would also
51	51	specify that Companies are not employers for the purposes of those laws.
52	52	House 4260 also specifies that Drivers are not employees for purposes of certain
53	53	Massachusetts employment laws, and that Companies are not employers. It would
54	54	accomplish this in a slightly different manner than House 4257 by amending applicable
55	55	statutes to specifically exempt Drivers, including Massachusetts General Laws (“G.L.”)
56	56	Chapter 149 Section 148B, which governs wage and hour laws and workplace conditions,
57	57	Chapter 151A which governs unemployment insurance, and Chapter 152 which governs
58	58	workers’ compensation. The three remaining Initiative Petitions achieve the same objective of clarifying that
59	59	Drivers are not employees and Companies are not employers, but also require Companies
60	60	to provide minimum compensation and benefit terms to the Drivers.
61	61	House 4258 is similar to House 4257 with compensation and benefit terms added to it.
62	62	This Initiative Petition establishes baseline contract terms between Drivers and
63	63	Companies and sets forth certain defined minimum and benefit terms. Beginning with the
64	64	compensation, Drivers would be assured a base compensation equal to 120 per cent of the
65	65	Massachusetts minimum wage for time spent getting to or completing ride or delivery
66	66	requests. Drivers would also be entitled to per mile compensation for that time beginning
67	67	at 28¢ per mile. The law would require that increases in compensation be tied to any
68	68	future annual increases of the state minimum wage and for the Executive Office of Labor
69	69	and Workforce Development to increase the per mile compensation by the percentage
70	70	increase in the state minimum wage, if any. If the earnings for a Driver fall below the
71	71	minimum compensation amount, the Company must pay the Driver the difference
72	72	between what the Driver earned and the minimum compensation amount. The baseline
73	73	contract terms provide for certain defined benefits for Drivers, including a limited
74	74	healthcare stipend, paid sick time related to hours driven, and certain private occupational
75	75	accident insurance benefits. The Initiative Petition would prohibit covered companies
76	76	from discriminatory practices and grant Drivers the opportunity to appeal a termination.
77	77	House 4259 amends G.L. Chapter 149 and Chapter 151A like House 4260 but creates
78	78	contract terms between Drivers and Companies similar to those in House 4258.
79	79	House 4256 has the broadest classification provision. The initiative would specify that
80	80	Drivers are not employees for any purpose whatsoever under Massachusetts law and that
81	81	Companies are not employers for any purpose whatsoever under Massachusetts law. Like
82	82	the two prior Initiative Petitions, it would then create baseline contract terms between
83	83	Drivers and Companies and set forth certain defined minimum compensation and
84	84	benefits. The wages and benefits are similar to those set forth in the prior two Initiative
85	85	Petitions. Like those Initiative Petitions, Companies would be prohibited from
86	86	discriminatory practices and must grant Drivers the opportunity to appeal a termination.
87	87	First Assistant Attorney General Moore also noted that there are currently legal
88	88	challenges to all five of these Initiative Petitions with plaintiffs asserting that the
89	89	Attorney General incorrectly certified the Initiative Petitions on the basis that the
90	90	Initiative Petitions violate the “single subject” provision of Article XLVIII of the
91	91	Amendments to the Constitution. Additionally, the relationship between Drivers and
92	92	Companies is the subject of a lawsuit from the Attorney General’s Office, beginning
93	93	under then-Attorney General Healey. This lawsuit contemplates whether under the
94	94	current Massachusetts Wage Act and the “ABC Test” definition of an employer-
95	95	employee relationship, Drivers should be considered employees and Companies
96	96	considered employers. First Assistant Attorney General Moore testified that if the
97	97	Supreme Judicial Court rules that Drivers are employees under current statute, the
98	98	Attorney General’s Office would be able to pursue lost wages and benefits for these
99	99	Drivers from the Companies they worked for. The five Initiative Petitions, if any pass, would end any prospective application of the decision should the Supreme Judicial Court
100	100	declare that Drivers are to be classified as employees.
101	101	Subject matter experts from academia and policy institutions provided testimony on the
102	102	history of employment law, including the increase in the use of independent contractors
103	103	in the 1970s, approaches to employment law in other jurisdictions such as California and
104	104	the European Union, and relevant industry statistics concerning Drivers and Companies.
105	105	Dr. Hilary Robinson, Associate Professor of Law and Sociology at Northeastern
106	106	University, testified that through these proposals, the Companies are claiming to be a
107	107	“protected class” that should be exempt from several statutes that govern relationships
108	108	between employers and employees and provide worker protections and benefits. Dr.
109	109	Robinson further testified that in her analysis of California’s laws pertaining to this issue,
110	110	classifying Drivers as employees did not impact flexibility or patterns of work, and that
111	111	the Companies, as they do now, retained control over what work Drivers have access to
112	112	perform, contradicting the claim that this model needs Drivers to be independent
113	113	contractors for successful operation and flexibility for Drivers. She also testified that in
114	114	her opinion, none of these five Initiative Petitions should be presented on the ballot, as
115	115	voters will not have the necessary information or background to make a truly informed
116	116	decision.
117	117	Further testimony from Dr. Veena Dubal, Professor of Law at the University of
118	118	California, Irvine, stated that evidence has shown that the passage of Proposition 22,
119	119	which classifies Drivers as independent contractors in California and which contains
120	120	similar provisions as the five Initiative Petitions before us, has shown to have a negative
121	121	impact on Drivers, with 40-60 per cent of Drivers’ work uncompensated and Drivers
122	122	netting an average of $6.20 per hour, compared to the state minimum wage of $16 an
123	123	hour. Dr. Dubal presented the results of a study showing that two-thirds of Drivers, many
124	124	of whom have made a significant capital investment in their work as Drivers, have been
125	125	terminated or had their account deactivated at some point, with 18 per cent losing their
126	126	vehicle and 12 per cent losing their housing as a result. Dr. Dubal went on to show the
127	127	occupational danger Drivers face, citing research showing gig workers are found to suffer
128	128	the highest rate of on-the-job fatalities and 67 per cent of Drivers have reported instances
129	129	of violence, harassment, or abuse while driving.
130	130	A third subject matter expert, Liya Palagashvili, Senior Research Fellow at the Mercatus
131	131	Center at George Mason University, highlighted the benefits for workers who enjoy the
132	132	flexibility of the current model. In Ms. Palagashvili’s opinion, attempts to classify or
133	133	regulate gig workers as employees are counterproductive because 90 per cent of jobs in
134	134	2020 were traditional, W-2 jobs, while the gig economy is designed for people who are
135	135	hoping to earn supplemental income in a flexible manner. Ms. Palagashvili stated that a
136	136	study in the aftermath of Assembly Bill 5, a California policy declaring Drivers as
137	137	employees, showed no consistent evidence that W-2 employment increased and a
138	138	significant decline not only in self-employment but overall employment as well for
139	139	affected occupations in California, matching studies of anecdotal findings from the New
140	140	York Times and the Los Angeles Times. Ms. Palagashvili further testified that, in her opinion, the best policy to pursue would be to enhance access to benefits while
141	141	maintaining the ability for gig work to persist as supplemental and flexible work. When
142	142	asked by the Committee, Ms. Palagashvili indicated that while the majority of Uber
143	143	Drivers have health insurance, she was unsure if the insurance was private or state-
144	144	funded, since Companies cannot provide health insurance benefits to Drivers due to their
145	145	status as independent contractors.
146	146	Two panels spoke as proponents in favor of the Initiative Petitions. The first panel
147	147	consisted of two Drivers, one who drives for Uber and Lyft, and another who drives for
148	148	Instacart, as well as two local industry representatives. The panelists emphasized the
149	149	flexibility and control over the schedule that the independent contractor model affords
150	150	Drivers, and how reliant communities are on the services that Drivers provide,
151	151	highlighting those in Gateway Communities, rural areas, and the elderly. The Drivers on
152	152	this panel stated that these jobs provided the income and the flexible scheduling
153	153	necessary to have control over their lives, and shared that like any industry, the rideshare
154	154	business is not for every prospective worker. The panel cited data from an industry-poll
155	155	that found that 75 per cent of Drivers year after year prefer being independent
156	156	contractors, and that more than 80 per cent of Drivers drive 15 hours or less a week.
157	157	When asked, the two Drivers on the panel stated that one received Social Security
158	158	benefits and the other received health insurance through MassHealth, but neither has a
159	159	W-2 job.
160	160	The second panel of proponents consisted of representatives from the Companies of
161	161	Uber, Lyft, DoorDash, and Instacart testifying in support of the five Initiative Petitions.
162	162	This panel discussed the benefits their platforms provide for customers, Drivers, and
163	163	small businesses, “who all use their platforms to grow and thrive”. This panel specifically
164	164	mentioned achieving the policy goal of flexibility and benefits for Drivers. The panelists
165	165	testified that the employee-employer laws do not prohibit flexible, on-demand
166	166	scheduling, but that the framework of such a model would not be feasible for the
167	167	Companies. Pointing to data, the panel shared that 80 per cent of Drivers on the Instacart
168	168	platform wish to remain independent contractors, and on average Instacart Drivers work
169	169	less than 10 hours a week, with many Drivers using it for supplemental income. Uber
170	170	pointed to statistics that Drivers on the platform earn on average $28.96 per utilized hour,
171	171	and that the overwhelming majority of de-platforming occurs because drivers come out of
172	172	compliance with the stricter laws in Massachusetts that currently regulate Companies.
173	173	During questioning from the Committee, this panel noted that the proposed regulatory
174	174	framework would align deactivation standards, and that the taxicab industry also operates
175	175	in an independent contractor framework. Additionally, the panelists testified that
176	176	Companies could decide to pull operations out of the Commonwealth if Drivers were to
177	177	be classified as employees whether through court decisions or the Initiative Petitions
178	178	failing, similar to the decision to end operations in Minneapolis and St. Paul, Minnesota
179	179	due to a mandated increase in minimum fares for Drivers in those Cities.
180	180	The panel shared that the Companies will plan to move forward to the ballot with just one
181	181	of the five proposed Initiative Petitions, but their preference is for a legislative compromise and to avoid the ballot box altogether, as was accomplished in Washington
182	182	state.
183	183	There were three panels of opponents who testified against all five Initiative Petitions.
184	184	The first panel consisted of two representatives from the International Brotherhood of
185	185	Teamsters, including the President of Teamsters Local 25 and the States Legislative
186	186	Director. This panel testified that the eyes of the labor movement across the country are
187	187	on Massachusetts, specifically to see if the Companies will succeed in watering down the
188	188	employment laws that are already on the books in statute. This panel’s concern was that if
189	189	the Companies are able to accomplish this in Massachusetts, they will be able to exploit
190	190	laws across the country. The Teamsters shared the position that the traditional employee-
191	191	employer model should be respected and properly enforced, and they oppose any
192	192	proposal that offers a third model to classify workers and ultimately weakens
193	193	employment standards. The panel not only noted their belief that Companies are currently
194	194	misclassifying Drivers as independent contractors, enabling wage theft and essentially
195	195	taxpayer subsidization of these companies, but that these Initiative Petitions have
196	196	implications beyond the app-based work of Uber and Lyft.
197	197	A second panel of opponents consisted of representatives from the Massachusetts AFL-
198	198	CIO, the Massachusetts Building Trades Council, and the California Labor Federation.
199	199	This panel stated that the strong employment laws of the Commonwealth are built on the
200	200	base assumption that workers are employees entitled to numerous benefits. In their
201	201	opinion, Big Tech companies cannot be trusted, as they have actively skirted the law,
202	202	“lining their own pockets,” and are now offering benefits that are far below the minimum
203	203	standard that employees are entitled to. The panel noted that Massachusetts has no
204	204	carveout currently to the ABC test and Massachusetts law goes even further by offsetting
205	205	federal carveouts to the ABC test. Additionally, the panel shared that misclassification of
206	206	workers has been rampant in the trades, where Companies are incorrectly classifying
207	207	employees as independent contractors to avoid providing benefits. The panel remarked
208	208	that there is no need to sacrifice hard-won rights that workers have fought for to simply
209	209	line the pockets of tech companies and additionally shared that California found gig
210	210	workers to be employees under every state employee-employer test. The panel
211	211	highlighted the irony of the campaign for Proposition 22 to remove the employee
212	212	designation of Drivers in California, which was run at the onset of the COVID-19
213	213	pandemic, when Drivers did not have access to masks, vaccines, air shields, sick time, or
214	214	death benefits.
215	215	The last panel of opponents consisted of a representative from the Massachusetts
216	216	Coalition for Occupational Safety and Health, a rider who was permanently injured while
217	217	in a rideshare vehicle, and a Driver. This panel echoed the sentiments of previous
218	218	opposition panels by saying that Companies are misclassifying workers and added that
219	219	this is to the detriment of worker earnings, benefits, and even safety, as Companies are
220	220	not forced to comply with OSHA regulations. Through this misclassification, Companies
221	221	have avoided responsibility for their workers, including workers’ compensation and death
222	222	benefits for Drivers. The rider who was injured in an Uber ride in 2021, testified that
223	223	Uber has refused to face him in court, and that its insurance policy only covered seven months of his continuing care, where his prescriptions cost $9,000 a month. The rider
224	224	noted that the Companies’ “shotgun pellet approach,” — starting with nine Initiative
225	225	Petitions, then whittling down to five Initiative Petitions — hoping just one Initiative
226	226	Petition can beat the legal challenges so they can shirk responsibility for actions taken by
227	227	their Drivers. The Driver on the panel, who has driven for Lyft since 2013 just a few days
228	228	after the platform was live in Massachusetts, questioned the data and statistics that the
229	229	Companies shared. In the Driver’s experience, Drivers do not have control over their
230	230	work, which is unlike independent contractor work. The Driver also stated that she was
231	231	deactivated from the platform after speaking out against the Company.
232	232	Conclusion
233	233	These Initiative Petitions elicit multifaceted public policy questions regarding the
234	234	fundamental nature of the employer-employee relationship and the individual terms
235	235	governing that relationship. The Committee is also cognizant of legal challenges
236	236	regarding these initiative petitions that are to be argued before the Supreme Judicial
237	237	Court in the month of May 2024, after the constitutional deadline that the legislature can
238	238	enact these initiative petitions. This timeline adds further complexity to the question of
239	239	enactment.
240	240	The testimony heard by the Committee showed an overall lack of consensus on the merits
241	241	or issues raised by the initiative petitions. The Committee feels that any action on this
242	242	subject must strike a balance between existing employee rights and protection, and the
243	243	need to ensure that TNCs can continue to operate, which they maintain would not be
244	244	possible if Drivers were not classified as independent contractors.
245	245	Particularly salient is the petitioners’ assertion that the drivers will lose flexibility if the
246	246	Companies are not able to lawfully classify them as independent contractors. Drivers who
247	247	testified before the Committee focused on the importance of flexibility and the benefit of
248	248	being able to work whenever they choose. However, proponents did not provide an
249	249	answer as to why work-hours flexibility would be impossible to provide regardless of
250	250	employment status. Massachusetts law currently does not limit the flexibility that
251	251	employers can offer to their employees.
252	252	For these reasons, given the legal and other uncertainties surrounding these initiatives,
253	253	we, the undersigned members of the Special Joint Committee on Initiative Petitions,
254	254	recommend that House No. 4257, House No. 4260, House No. 4258, House No. 4259,
255	255	and House No. 4256, as currently drafted and presented to this Committee, OUGHT NOT
256	256	TO BE ENACTED BY THE LEGISLATURE AT THIS TIME.
257	257	Senators. Representatives.
258	258	Cindy F. Friedman Alice Hanlon Peisch
259	259	Paul R. Feeney Michael S. Day
260	260	Jason M. Lewis Kenneth I. Gordon
261	261	Ryan C. Fattman David T. Vieira