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State auditor says Uber, Lyft drivers could be missing hundreds of millions in ‘lost payments’

The state auditor's report comes as ride-share driver debate escalates. Uber and Lyft want drivers to remain as independent contractors, while some drivers are fighting for the right to unionize.

By Molly Farrar

May 2, 2024

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The state auditor is chiming in on an ongoing debate involving ride-share drivers with companies like Uber and Lyft. Some drivers want to unionize for better working environments, while the companies want to keep drivers as independent contractors.

Union members, ride-share drivers, and representatives from the popular ride-share and food delivery apps all spoke to a special joint committee in March about two proposed ballot questions. 

One would allow ride-share drivers to unionize to protect their rights, and another wants to ensure that drivers cannot be classified as employees.

The 32BJ SEIU union is behind the move to let drivers unionize. Roxana Rivera, assistant to the president of the union, told legislators it is unprecedented that ride-share drivers have to pay for their own materials, suffer from “outrageously low wages” that continue to fall, and fear an impersonal deactivation process from their corporations.

“I’ve never seen such a large population of workers step forward to demand change so urgently,” Rivera said. “The solution drivers are seeking is to have a means to address these problems themselves through the collective power of a union.”

A recent union-backed report found that the average driver makes sub-minimum wage at just $12.82 an hour. Drivers can also fear for their safety after incidents of sexual assault and harassment, some told The Boston Globe, who withheld their names for fear of the companies would deactive or freeze their accounts. 

State auditor says state is missing out on millions

Drivers aren’t the only people who could benefit from employee status. State auditor Diana DiZoglio released a report this week showing that transportation network companies — also known as ride-share apps like Uber and Lyft — could contribute millions of dollars to state employee protection programs.

DiZoglio referred to the millions as “lost payments,” which Uber and Lyft are not obligated to pay as their workers are considered independent contractors. If drivers were considered employees — making them eligible for minimum wage and other benefits — ride-share companies would have to contribute to workers’ compensation, unemployment insurance, and paid family and medical leave. 

Over the past decade, the companies could have contributed at least $266.4 million to these programs, the state auditor said. 

“We encourage the State Legislature and Administration to enact measures to ensure full transparency of driver earnings, hours worked, and other key employment statistics,” DiZoglio said in a statement. 

Lyft, Uber want to keep workers classified as independent contractors

The big app companies — Uber, Lyft, Doordash, and Instacart — have told lawmakers that drivers want to be independent contractors. They have consistently said drivers, some of whom work less than 20 hours a week, value flexibility.

“The reality is that traditional employees cannot find minute by minute flexibility that is comparable to driving with Lyft,” Brendan Joyce, Lyft’s public policy manager, said in March.

The ballot question would specifically bar ride-share and delivery drivers from being classified as employees if they work through an app, aren’t required to work specific days or accept specific requests, and aren’t restricted from working with multiple companies.

Flexibility and Benefits for Massachusetts Drivers ballot committee, an industry-backed group supporting the ballot measure, received more than $7 million from the major companies, the Globe reported.

Lyft directed comments about the state auditor’s report to the ballot committee. A spokesperson said DiZoglio’s findings, which were based on the union-backed report, were “wildly flawed” and that rideshare and delivery platforms bring billions of dollars to Massachusetts’ economy.

“A reputable, professional auditor would consider all the relevant datasets before reaching conclusions, rather than beginning with a predetermined, politically-motivated conclusion first and building out an analysis to achieve it,” the spokesperson said.