‘Greedy corporations’ | Uber & Lyft accused of dodging $266mn in benefit contributions through employee misclassification

Uber & Lyft accused of dodging $266mn in benefit contributions through employee misclassification

A Massachusetts State Auditor released a report on Tuesday, April 30, accusing companies like Uber and Lyft of avoiding payments of over $266million into the state’s employee protection programs.

The report, titled “Assessing Transportation Network Companies’ Financial Obligations to Massachusetts Programs,” suggests that the companies have dodged benefit contributions through employee misclassification.

Compensation, unemployment insurance, and paid family leave programs are all included in the estimations from State Auditor Diana DiZoglio, estimating that by deeming workers as independent contractors, Uber and Lyft avoided $47million in payments in 2023 alone.

The “conservative” figures do not include other programs such as food and healthcare assistance.

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Sean M. O’Brien, General President of Teamsters, a labor union that spans across North America, has commented on the report, describing the companies as “greedy corporations” and accusing them of “exploiting workers and taxpayers in the name of innovation and convenience.”

Another Teamsters representative, Tom Mari, President of Teamsters Local 25, described Uber and Lyft as “tax cheats.”

“They are getting away with highway robbery, depriving the Commonwealth of millions in tax revenue while simultaneously financing million-dollar campaigns to sidestep our laws,” he alleges.

The report concludes by calling for greater action from legislators to ensure companies are making the required contributions to sustain worker benefits and protections. “We encourage the State Legislature and Administration to enact measures enforcing full transparency of driver earnings, hours worked, and other vital employment statistics,” it proposes.

“A free ride for far too long” – The employee misclassification debate continues

Bills have recently been introduced to the General Court of Commonwealth in Massachusetts aimed at improving collective bargaining rights for workers at app-based companies and creating more stringent requirements for employee classification.

Moreover, in March, Massachusetts became the second state (after California) to pursue a court ruling on whether Uber and Lyft have broken labor laws through misclassification.

The complaint by Massachusetts Attorney General Maura Healey argued that the companies save millions of dollars annually by treating workers as independent contractors ineligible for unemployment or workers' compensation benefits.

“The bottom line is that Uber and Lyft have gotten a free ride for far too long,” Healey stated, speaking to AOL.

CJ Macklin, a Lyft spokesperson told AOL that the lawsuit would “eliminate work for more than 50,000 people.”

“Drivers don’t want this,” the statement added. “Most drive only a few hours a week, and they have chosen to drive using Lyft precisely because of the independence it gives them to make money in their spare time,” he wrote.

2024 has seen greater efforts from the Biden administration to clamp down on employee misclassification, with a new classification test implemented as of March 11, 2024. 

Groups including the US Chamber of Commerce filed a suit in Texas earlier in March, arguing that the US Department of Labor rule violated federal wage law.

Uber and Lyft have both said being forced to reclassify independent contractors as employees would damage their profitability, in annual reports filed with the Securities and Exchange Commission.



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