In these challenging economic times, people are choosing independent contracting. So, as labor organizers in Massachusetts attempt to reclassify rideshare drivers as W-2 employees, drivers are fighting to preserve their self-employment tax status.
With the rapid growth of the Bay State’s gig economy over the last three years, state lawmakers should strive to legitimize the independent status of contract workers.
Labor law currently offers two paths: universal benefits offered to traditional employees by employers and optional benefits for independent contractor work.
Enter the portable benefits model, an alternative allowing independent contractors access to health, dental, and related benefits plans without losing their 1099 status. Flexible workers voluntarily contribute to a portable benefits account tied to them and not an employer.
On Nov. 6, the Massachusetts state legislature
heard
a portable benefits bill for rideshare drivers. Bill opponents accused Uber and Lyft of trying to “codify” their “own violations of state employment law” through this model, but portable benefits aren’t controversial. In fact, bipartisan legislation has been
debated
in Congress and passed in
Utah
and
Washington
.
A Beacon Research poll from March
asked
Massachusetts drivers about portable benefits. Of those surveyed, 85% said they supported these reforms that offered a “minimum earnings guarantee of $18 per hour, paid sick time and family leave, healthcare stipends, discrimination protections, and deactivation appeals.” Another state poll found that 83% of rideshare drivers
support
access to this benefits model.
Economic trends are favoring independent contractor arrangements over traditional employee equivalents: 72.1 million people, 45% of the workforce,
now
partake in independent contractor work such as rideshare driving on a part-time, full-time, or occasional basis. MBO Partners’ 2023 State of Independence
report
notes independent workers are in high demand.
Over 1.5 million independent contractors
operate
in Massachusetts. State law needs to reflect this reality, not punish those who engage in flexible work arrangements. Unfortunately, state law creates obstacles to entering the gig economy.
The state’s worker classification process is primarily to blame. To determine a worker’s classification status, it
adheres
to an obtuse ABC test — one reminiscent of California’s Assembly Bill 5. Independent contractors
must
demonstrate their work is done without the direction and control of the employer, is performed outside the usual course of the employer’s business, and is done by someone who has their own independent business or trade doing that kind of work. Like California, unless workers fulfill all three metrics, the test automatically categorizes them as default employees and not independent contractors.
Nevertheless, the state’s
rigid
law doesn’t accurately reflect workers, especially rideshare drivers, and their self-perceptions of worker status.
More than 75% of Bay State rideshare drivers
prefer
to be independent contractors. This finding parallels national polling on rideshare driver attitudes and their inclination to identify as independent contractors over employees. A 2021 Pew Research Center “State of Gig Work” report
found
that 62% of respondents viewed these drivers as independent contractors, and an even greater share, 65% of respondents, were app-based workers, including drivers, who saw themselves as independent contractors.
Massachusetts rideshare drivers need not just concern themselves about Beacon Hill. Similar reclassification efforts in Congress through legislation such as the Protecting the Right to Organize Act would also harm the state’s independent workforce and
amount
to $4.7 billion in reclassification costs — a higher cost than
fighting
worker classification.
Two dueling Massachusetts ballot initiatives concerning rideshare drivers
cleared
legal hurdles and are expected to be listed on the 2024 election ballot. While one attempts to unionize rideshare drivers under the guise of correcting worker misclassification, the other would uphold their independent contractor status.
As more Bay Staters seek out innovative ways to work, rulemaking needs to reflect reality, not keep antiquated labor laws in place.
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Gabriella Hoffman is the northeast regional leader at Young Voices and a freelancer. Follow her on X at
@Gabby_Hoffman
.
