Uber and Lyft are currently facing a trial in the United States based on a lawsuit filed by Massachusetts' attorney general. The lawsuit alleges that the ride-share companies misclassified their drivers as independent contractors instead of employees, which would result in higher costs for the companies.

The trial, taking place in Boston, is part of a larger legal and political battle in Massachusetts and across the country regarding the status of drivers for app-based companies. These companies have played a significant role in the gig worker economy in the United States.

Massachusetts Attorney General Andrea Joy Campbell argues that Uber and Lyft drivers should be considered employees under state law. This classification would entitle them to benefits such as a minimum wage, overtime pay, and earned sick time.

The attorney general's office claims that the companies have misclassified thousands of drivers in Massachusetts and cannot meet the three-part test outlined in the state's worker-friendly laws that would allow them to be considered independent contractors.

Studies have shown that using independent contractors can result in cost savings of up to 30% for companies compared to employing individuals as full-time workers.

Uber and Lyft, on the other hand, argue that they have correctly classified their drivers. They assert that they are technology companies that facilitate connections between drivers and potential riders, rather than transportation companies that directly employ drivers.

The companies warn that if the court rules against them, they would be unable to maintain their flexible business model in Massachusetts. This outcome could potentially lead to cutting or ceasing operations in the state.

Rohit Singla, a lawyer representing Lyft, stated during a pre-trial hearing that their current business model does not support treating drivers as employees and is not designed to work that way.

Interestingly, this trial coincides with a separate legal proceeding in Massachusetts' highest court. The court is considering whether to allow an industry-backed ballot measure to be presented to voters in November. This measure defines drivers as contractors but grants them certain new benefits. The court seems inclined to allow some version of this proposal to appear on the ballot, along with a rival ballot measure backed by labor that aims to enable drivers to unionize.

The lawsuit going to trial was initially filed in 2020 by Maura Healey, who was the attorney general at the time and is now the state's Democratic governor. If the state prevails in the trial, Uber and Lyft could face substantial penalties for their failure to properly classify their drivers.

A report by the state auditor indicates that by not classifying their Massachusetts drivers as employees, Uber and Lyft have avoided paying $266.4 million into workers' compensation, unemployment insurance, and paid family medical leave over a span of ten years.