Massachusetts’ top court says it’s fine to treat taxi drivers as independent contractors, rather than actual employees of the cab companies. But the ruling probably won’t help the taxi industry’s nemesis, Uber, because the heavily regulated cab business is so complex.
Old-school taxi companies and next-generation alternatives Uber and Lyft have all been targeted by civil lawsuits against their business models in recent years.
Those lawsuits have argued that it’s unfair to consider drivers independent business owners who just lease a car, in the case of taxis, or pay for access to smartphone-app customers, which is what Uber and Lyft provide. Rather, the lawsuits seek to have drivers classified as employees because they provide an essential part of the larger companies’ service.
Winning a lawsuit like that could entitle drivers to financial awards, including reimbursement for business expenses.
There’s another common link in the legal cases against Uber, Lyft, and Boston-area taxis: They’re all being handled by Boston lawyer Shannon Liss-Riordan, a labor-law expert who has won worker mistreatment cases on behalf of airport skycaps, strippers, and restaurant workers.
(Liss-Riordan is also suing a few other digital startups that provide on-demand services from contract workers: personal courier startup Postmates, restaurant-delivery service Caviar, and home-cleaner provider Homejoy.)
So, with the Massachusetts Supreme Judicial Court rejecting an independent contractor lawsuit against taxis on Tuesday, should Uber and Lyft be encouraged? Not necessarily.
Local regulations set up by Boston police have created an intricate system where taxi owners, dispatchers, and drivers are all legally separate entities, even if the same person owns more than one of those companies.
And while it’s illegal for a business to set up a bunch of shell companies to bypass worker protections, Boston taxi laws have made that same kind of complicated system a legal requirement.
“In other words, the distinctions in services within the taxicab industry as a whole are not illusory, but quite real,” the court said.
That also means it could be hard for another industry to take the taxi ruling and run with it, since the taxi market is a very unique beast.
“With Uber and Lyft, we don’t have that situation. It’s just one company doing everything,” Liss-Riordan said. “That’s I think the most significant reason why this decision wouldn’t apply.”
The court also mentioned another difference in business model that could have an influence on Massachusetts cases against Uber and Lyft.
Cab drivers typically pay a flat daily fee to use a cab company’s car, while Uber and Lyft take a percentage of the fares they send to a driver. But charging a flat rate provides a degree of distance between the drivers’ and owners’ business interests, the court said, while a percentage payment system could indicate the businesses are woven together a lot more closely.
Two of the winners in Tuesday’s ruling, EJT Management and Boston Cab, said that percentage-fee section of the ruling “indicates that Uber is operating in violation of the city of Boston’s rules and Massachusetts’ independent contractor statute and wage laws.”
Uber declined to comment on the court cases, and a Lyft spokesman didn’t respond to a request for comment.