Press Release  Office of the State Auditor Launches Impact Analysis of Transportation and Delivery Network Companies on State Funds and Programs

Boston — Today, the Office of the State Auditor Diana DiZoglio (OSA) announced that it will conduct an analysis of the impacts that transportation network companies (TNCs) and delivery network companies (DNCs) have on state benefit programs and the use of taxpayer dollars. 

Recent figures show over 200,000 independent contractors working in Massachusetts’ rideshare and food delivery companies. These companies treat workers as independent contractors. In doing so workers are denied overtime pay, unemployment insurance, or workers’ compensation – among other benefits that workers considered as employees are generally entitled to.

“Our office will review and analyze the impact TNC and DNC companies have on our state unemployment insurance and workers’ compensation systems,” said DiZoglio.

The law in Massachusetts (MGL c. 149, section 148B) requires a three-prong test— as stated in law, to be an independent contractor, all three requirements must be met:
 

1. The individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and
2. The service is performed outside the usual course of the business of the employer; and,
3. The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.
   
    

“Our unemployment and workers’ compensation systems are already stretched,” said DiZoglio. “This continues to put a burden on businesses and taxpayers alike, while reducing the benefits available for people in need.”

Recently, New Jersey successfully reviewed TNC and DNCs classification of workers as independent contractors and the wide-ranging effects of these decisions. The OSA aims to similarly provide taxpayers with an impact analysis that will shine a light on tax responsibilities, workers' safety, best practices, and potential inequities across state systems to help ensure greater accountability and transparency.

The OSA’s analysis coincides with ongoing litigation by the Attorney General seeking a declaratory judgment that would require rideshare companies to comply with state wage and labor laws covering independent contractors.

###