Overview
Workers’ compensation in Massachusetts is an insurance system designed to provide benefits to employees who suffer work-related injuries or illnesses. Workers’ compensation ensures that injured employees receive medical treatment, wage replacement, and other necessary services without the need for litigation.26
The Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIBMA) is responsible for calculating workers’ compensation insurance rates in the Commonwealth. WCRIBMA is a private, nonprofit association of insurers that provides underwriting and statistical services to its members. WCRIBMA submits rate filings to the state’s Division of Insurance, recommends rate adjustments, and manages the classification system for workers’ compensation insurance.
The Office of the State Auditor, through DLM, consulted with WCRIBMA on what would constitute an appropriate contribution to the program from TNCs. DLM first explored the example of a driver employed by a taxicab company, who would be assigned according to the Workers’ Compensation Manual27 to Code 7370 – Taxicab Co: All Other Employees & Drivers. The current filed and approved rate, effective July 1, 2023, is $3.66 per $100 of payroll. For example, if a driver employed by a taxicab company earned $40,000 during an annual insurance policy period, the associated workers’ compensation premium for this driver would be $40,000/100 x 3.66 = $1,464.
However, unlike most taxicab drivers, Lyft and Uber drivers use their own vehicles and are responsible for the maintenance and expenses associated with providing their services. Should this matter be litigated, TNC drivers may be subject to Rule IX-C 3(c) of the Workers’ Compensation Manual, which calls for using 33 1/3% of the contract price to reflect the cost of fuel, maintenance, or other services that are associated with the operation of the vehicles of employees or subcontractors of uninsured independent contractors:
If vehicles with drivers, chauffeurs or helpers are engaged under contract and the owner of such vehicles has not furnished evidence that the workers compensation obligation has been insured, the total payroll of such drivers, chauffeurs or helpers shall be included as payroll of the insured employer that contracted for such vehicles. Such payroll shall be assigned to the classification applicable in that risk to drivers. If that payroll cannot be obtained, 33 1/3% of the total contract price for the vehicles shall be considered as payroll of the drivers, chauffeurs or helpers. If the owner of a vehicle under contract also is a driver and is entitled to workers compensation benefits and has not furnished evidence that such workers compensation obligation has been insured, 33 1/3% of the contract price for that vehicle shall be included as payroll of the insured employer that contracted for the vehicle.28
To provide an illustrative example, according to Rule IX-C 3(c) of the Workers’ Compensation Manual, if Company A is subcontracting transportation to Contractor B (who is not paying into workers compensation), and Contractor B is further subcontracting to Independent Contractor C, then Company A is responsible for paying a premium of $488 for an Independent Contractor C paid $40,000 (at 2023 rates).
Given the WCRIBMA-provided rate of $3.66 per $100 of payroll, lost workers’ compensation payments can thus be estimated at ($1,428,574,247/100) x $3.66 = $52,285,817 for the year 2023, if TNC drivers were considered to be analogous to taxicab drivers. However, in an effort to provide a more conservative assessment, DLM estimates $17,428,606 in lost workers’ compensation payments if Rule IX-C 3(c) of the Workers’ Compensation Manual was applied instead (meaning 33 1/3% of $52,285,817).
Under either assessment, TNCs have failed to pay between tens and hundreds of millions of dollars into the system over the past decade, precluding employees from accessing workers’ compensation benefits. Workers ineligible but in need of workers’ compensation assistance must look elsewhere for support—and when that support is not employer-funded, it is often realized at the state’s expense through services provided via emergency medical assistance programs, community health centers and clinics, Medicaid/MassHealth, and/or general assistance programs such as SNAP food benefits or RAFT housing assistance.
| Date published: | April 30, 2024 |
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