Massachusetts AG Announces Landmark Settlement with “Gig” Economy Company
Boston, Mass. (November 21, 2019) - Massachusetts Attorney General Maura Healy recently announced that her office has reached a “landmark settlement” with a Boston-based “gig” economy company. Healy stated that as of January 1, 2020, healthcare workers who use the digital platform Stynt to find shifts will become employees rather than independent contractors. The impacts of the Stynt settlement and misclassification in Massachusetts could potentially be far-reaching.
Healy believes the settlement could serve as a “model” for similar platforms as gig opportunities expand in a “more professional direction.” However, the very nature of a gig is flexible, and the consequences of such a law could cause some employers to go out of business. The Stynt settlement will reportedly force the company, which helped place more than 400 workers in 2018, to substantially change its business model.
Until recently, the focus on the status of gig workers has been on lower-level jobs such as passenger drivers, package deliverers, and grocery shoppers. However, as the gig economy rapidly grows, a variety of workers are being placed in many types of positions. Massachusetts has very strict definitions for who can be classified as an independent contractor, and the employer must take extreme caution when making such a classification. For example, workers who are not under the control of an employer, who perform jobs outside a company’s “usual course” of business, or who have their own independent practice doing similar work are not considered independent contractors. California recently passed a similar law, and other states are considering them as well.
So far, eight states have adopted laws exempting such “gig” companies from labor standards and tax obligations. The Coalition for Workforce Innovation, which includes members such as Lyft and TaskRabbit, is seeking to update labor laws to make “independent work … applicable across all positions, platforms, and industries.”
The impact of this settlement will likely include increased litigation (especially in companies that are affected by with multi-state laws), as well as the potential of receiving less money from investors.
For more information on this development, please contact the attorneys listed below. Visit our Labor & Employment Practice page to learn more about our nationwide team.
Courtney Longo, Partner
Jade McKenzie, Associate