Pass The Labor Rate Bill

Important Facts About the Auto Body Labor Rate Bill
For State Legislators

~ The Auto Body Labor Rate Bill was sponsored in the Senate (S-122) by Sen. Stephen Buoniconti of Springfield, Chairman of the Joint Committee on Financial Services, and in the House (H-1043) by Rep. Robert Spellane of Worcester, Chairman of the Joint Committee on Public Service. The language is the same in both bills.

~ For over a decade, Massachusetts auto collision shops have received the lowest labor rates in the country, despite operating in one of the highest cost states. As of September 30, 2009, Massachusetts labor rates now average $35.75 per hour. The rate in the next lowest state, Tennessee, is $39.69 per hour. All other states have labor rates over $40.00. The National Average labor rate is $45.02. And, our neighboring state, Connecticut, with similar demographics to ours, has a labor rate of $47.74. We are paid 29%, or nearly one-third less than the rate paid in Connecticut!

~ The bill had the support of an overwhelming majority of state representatives and senators during the 2007-2008 session. A version of the bill, requiring a special commission to study its effects, was passed through the FY 2009 budget as Section 108.

~ In its report on December 30, 2008, the special commission recommended that the General Court should review updated labor rate information to determine what effect the implementation of managed competition had on rates, based on industry reports as of June 30, 2009.

~ EIGHT CENTS! Insurers promised that managed competition would resolve the labor rate problem in Massachusetts. On December 30, 2008, the rate was $35.65. On June 30, 2009, it was $35.73. The best efforts the insurers could muster under the threat of action on our bill was EIGHT CENTS! At this rate, it will take 58 YEARS for Massachusetts to reach TODAY'S national average. Our families can't wait until 2068! The free market in our industry is broken, and it was broken by insurance companies.

~ The bill prescribes that a new, self-funded commission would resolve and oversee all issues regarding insurer-paid labor rates for auto body shops. New fees of approximately $170,000 from body shops would fund this commission. The commission will operate at no cost to the commonwealth.

~ Collision shops would be required to comply with higher, industry-accepted standards in order to gain their classifications. An additional fee would be paid by shops for on-site inspections that would be conducted to verify compliance. A portion of the application fees would also be retained for commission expenses.

~ Only those shops that comply with the standards would be eligible for the new rates. This tiered labor rate system would lower costs for insurers, yet compensate shops fairly. It creates a win-win situation.

~ The Labor Rate Bill will not add one nickel to premium rates because of a regulation change, sponsored by the collision industry, that helps to save millions for insurers and Massachusetts consumers. In fact, we project that insurers would save up to 40 dollars per claim if the Labor Rate Bill passes and the carriers utilize the Expedited Supplement Process regulation in a non-prejudicial manner.

~ The higher standards prescribed in the bill will be a great benefit for consumers through a major modernization effort by the most reputable collision shops. These higher standards will assure a competitive market that can meet the challenge of repairing today's -- and tomorrow's -- high tech vehicles.

~ Passage of the bill will allow collision shops to offer career paths for the thousands of trained vocational school graduates, education which costs our state millions of tax dollars every year, who now enter other industries because starting wages are so low.