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Massachusetts Supreme Judicial Court Rules in Favor of Taxicab Owners, Fails to Find Drivers Employees for Workers’ Compensation Purposes

taxi-bubble-sign-1442111-mIn a critically important recent case, Sebago v. Boston Cab Dispatch, Inc., Mass. Sup. Jud. Ct. (2015), the Supreme Judicial Court entered a decision on the issue of whether state wage laws are disharmonious with Rule 403, which extensively regulates the taxicab industry in Boston.

At issue in the case was the contention that several taxicab drivers believed that they were improperly classified as independent contractors, rather than employees, and that therefore they were properly entitled to workers’ compensation benefits, among other related claims.

In 1930, the legislature granted the authority to the police commissioner of Boston to create regulations for taxicabs and related methods of transportation. Then in 2008, pursuant to that prior regulatory system, the commissioner under the authority of that mandate promulgated Rule 403. This created a comprehensive system of rules and regulations that govern the ownership, leasing, licensing, rate setting, and operation of taxicabs in the city of Boston.

In the opinion at hand, the court delved into an in-depth discussion regarding the various regulations set forth in Rule 403, which included four separate kinds of taxicab business models:  owner operator, leased, shifted, and managed.

The plaintiffs in the case were licensed taxicab drivers who leased taxicabs and medallions from the medallion owners at flat rates, as set forth by the commissioner, specified in Rule 403. The agreements signed by the plaintiffs in relation with the defendants set forth all of the relevant terms relating to the lease period and further contained an optional independent contractor clause, stating that the plaintiffs were not employees of the defendants.

The court then engaged in an in-depth discussion of independent contractors. The three factors that are applied in order to determine whether an individual is an independent contractor are whether:

“(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.”

The court found that there could be a genuine issue of material fact as to whether the plaintiffs provided services to the medallion owners in addition to the leasing relationship. However, it looked to whether the drivers were free from control and direction in connection with the service. It found that the drivers received minimal instructors from the defendants that they leased medallions from, decided the shifts they wanted to work, and were free to transport as many or as few passengers during their shifts as they wished. Drivers were further able to decline dispatches altogether, with one plaintiff stating he had never utilized the radio service available.

Additionally, the court stated that rule 403 has extensive regulations regarding the driver’s appearance, cell phone usage, and even what to do in the event that a rider leaves an article behind. Those are the types of regulations that courts typically look to in order to determine whether an employment relationship exists. According to the court’s logic, therefore, since they are addressed in Rule 403, however, there is no evidence that the defendants were controlling the work parameters of the plaintiffs.

The second prong was apparently the main source of contention. The court found that because the drivers were not required to remit a percentage of their revenues to the medallion holders, the services were outside the usual course of the employer’s business.

Lastly, the court found that the defendants met the burden of proving the third prong, the conducting of an independent type of business, since the defendants could have leased the medallions necessary for leasing the taxicabs to anyone, and the drivers could have answered as many calls as they wanted to, advertised separately, and so on.

The court thus vacated the order denying summary judgment to the defendants and remanded the case for an entry of judgment in favor of the defendants, and for other proceedings consistent with the opinion.

If you become injured or ill as a result of something that happens at work, you want to ensure your best chance at securing compensation for your injuries. The experienced Massachusetts workers’ compensation lawyers at Pulgini & Norton offer comprehensive guidance and representation in these matters. We can assist you throughout the entire workers’ compensation claim process. Call our office today at (781) 843-2200, or you can contact us online in order to schedule an initial consultation.

More Blog Posts:

Massachusetts Attorney General Prosecuting Workers’ Compensation Fraud Cases, Massachusetts Workers’ Compensation Lawyer Blog, published April 21, 2015

Massachusetts Appeals Court Affirms Decision in Workers’ Compensation Fraud Case, Massachusetts Workers’ Compensation Lawyer Blog, published April 14, 2015

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