Auto Labor Rate Legislation in Massachusetts

Three bills have recently been filed in the Massachusetts legislature that would require motor vehicle insurers to pay a minimum hourly labor rate when reimbursing repair shops in the State. Identical bills by Rep. Cabral (H494) and Sen. Welch (S599) would create this minimum rate by using the average rate paid by insurers in abutting states (CT, NY, NH, RI, and VT) subject to an upwards or downwards adjustment of this figure by up to 3% from the State’s Division of Insurance. The two bills also include a “sunset” clause providing that this mandatory rate-setting practice would expire in 2026. A bill filed by Rep. Kafka (H546) would create the same 3% adjustment but uses the average of the other New England States (substituting NY for ME) and does not contain a “sunset” provision. A fourth bill (H2965), sponsored by Rep. Lawn, would require the Division of Insurance to conduct an inquiry into current labor rate practices but would not prescribe any minimum hourly rate.

Similar legislation has been filed in Massachusetts for six consecutive legislative sessions dating back to 2007. In public testimony last session, supporters asserted that Massachusetts has the lowest average auto body reimbursement rates in the country at $37 per hour. By contrast, supporters testified that the average rate in New England is $45 per hour and the national average is $48 per hour. Last session, the Joint Committee on Financial Services gave a favorable report on similar legislation before the bill stalled in the House Committee on Ways and Means. These bills have all been referred to the Joint Committee on Financial Services, as they have in past sessions, and are expected to receive a public hearing in the coming months.