May 1, 2024 - News

Audit: Massachusetts could be leaving $266M on table with rideshare companies

Uber and Lyft sign in windshield of sedan in Queens, New York.

Uber and Lyft signs in the windshield of a car in New York. Photo: Lindsey Nicholson/Education Images/Universal Images Group via Getty Images

If rideshare drivers were classified as employees, the companies behind them would have owed Massachusetts on average $266 million in state benefits from the past decade, per a state auditor's report.

Why it matters: A Superior Court judge and a ballot measure later this year could determine whether drivers for Uber, Lyft, DoorDash and similar companies should be classified as full-fledged employees, who are entitled to certain benefits, or as contractors.

State of play: The report estimates how much rideshare and other companies could owe in payments for workers' compensation, unemployment insurance and paid family and medical leave.

  • In the current scenario, rideshare companies don't owe any money to cover state benefits because their drivers are considered independent contractors.

Yes, but: The estimates range widely because the Department of Public Utilities did not share data on the number of drivers and how much they earned, saying it wasn't a public record.

  • Auditor Diana DiZoglio's office relied on data from the RMV about rideshare-specific inspections and the Drivers Demand Justice Coalition, an advocacy group that supports classifying drivers as employees.

The estimates range from $89.1 million, assuming all drivers worked just five hours weekly, to $713.5 million, assuming all drivers worked 40 hours weekly.

Zoom out: Uber and a subsidiary paid $100 million to New Jersey's unemployment trust fund after a 2022 ruling found its drivers were misclassified as independent contractors.

  • New York's attorney general reached settlements with Uber and Lyft last year totaling $328 million over driver access to state benefits.

What they're saying: Teamsters general president Sean O'Brien, who believes the drivers should be treated as employees with access to benefits, said the report shows "the true cost of employee misclassification."

  • "We encourage other states to conduct similar audits to find out the extent of Big Tech's fleecing of the American public."

The other side: A spokesperson for a group representing the rideshare companies, which have repeatedly said drivers rely on the flexibility of being a contractor, called the auditor's hypothetical estimates "wildly flawed."

  • Conor Yunits, a spokesperson for Flexibility and Benefits for Massachusetts Drivers, noted the data comes from an advocacy group whose supporters have endorsed DiZoglio in the past.
  • He said the audit left out a rideshare-backed report estimating that rideshare and delivery platforms boosted economic activity in Massachusetts by $8.3 billion a year.
  • "A reputable, professional auditor would consider all the relevant datasets before reaching conclusions," he said in a statement, "rather than beginning with a predetermined, politically motivated conclusion first and building out an analysis to achieve it."

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