Appellate Division Overturns Trial Court Decision That Auto Cab Driver Was An Independent Contractor

10.31.18

In a recent decision, the Appellate Division reversed and remanded a Trial Court's decision that an auto cab driver had not established an employment relationship with the employer.

In Pendola v. Milenio Express, Inc., d/b/a Classic, an auto cab driver in Newark, fractured his ankle in 2014 picking up a customer. The sole issue was whether the driver was an employee or an independent contractor. At trial, the driver and an employer supervisor testified. The driver testified that he worked exclusively for the employer since 2003. The employer required that he paint his car silver, the color assigned to the company by the City of Newark, and affix the employer logo and phone number to the sides and front of the car. The employer also required that the driver purchase a two-way radio to be installed in the car. The driver paid for the medallion, gas, maintenance on his car and liability insurance. The employer provided business cards, receipts and vouchers all bearing the employer's name. He was only permitted to pick up passengers dispatched through the employer. He was required to pay the employer $150 per week as a dispatch fee. He also test ified that the employer had rules that the drivers had to follow. If a driver failed to follow the rules, the driver would be suspended.

The supervisor testified that the drivers were independent owners/operators, who owned their own vehicles, their own medallions and was charged by the employer a weekly dispatching fee for the service. She explained that if the drivers were going to work for the company, their cars needed to be silver with their logos on it since the City of Newark assigned the color to the company. She stated that the employer does not force the drivers to pick up passengers as they were their own bosses. If a driver violated the rules, the driver was out for two hours. The drivers had no written agreements and did not receive a 1099. However, the drivers were not free to pick up passengers in their silver cars dispatched through a competitor.

Based upon the testimony, the Judge concluded that the driver was not an employee. The Judge found that the employer exercised very little control over the driver noting that the Taxi Division required that the taxi had to be silver with the company logo and phone number. The Judge noted that the driver was free to accept or reject fares dispatched by the employer. The employer did not pay the driver a salary and the driver had to pay a dispatching fee of $150. The Judge further noted that the employer was not dependent on the driver since there were other drivers available if he was not available for a fare.

On appeal, the driver argued that the court underestimated the degree of control the employer exercised over its drivers. He also argued that the Judge misconstrued the economic dependence of the driver upon the employer's business and the relationship of the nature of his work to the operation of the business. The appellate division agreed noting that three factors should be considered in determining an independent contractor: 1) employer control; 2) the worker's economic dependence on the work relationship; and 3) the degree to which there has been a functional integration of the employer's business with that of the person doing the work at issue. The Court noted that the driver had been working for the employer for 11 years and it was clear that it was his sole source of income. The employer exhibited its control over the drivers with its requirement of a two-way radio and its rules that the employer would enforce concerning the dispatched passengers, the condition of t he cars, and not being able to pick up a competitor's dispatched passengers. More importantly, the Judge noted that the employer was dependent on the driver and other drivers like him to operate a successful business 24 hours a day. Therefore, the Court concluded that the driver was an employee under the workers' compensation laws.

Comment: Claims involving alleged independent contractors are very fact sensitive. The parties will need to look very closely at the facts of each claim and apply it the independent contractor test to determine whether an employee relationship exists. In claims involving Uber drivers, although their position is similar to that of an auto cab driver, Uber emphasizes the independence and flexibility that Uber drivers have in working as often as they want and whenever they want. As such, Uber drivers would most likely be classified as an independent contractor.

For more information, please contact Cheryl A. Binosa at cbinosa@wglaw.com or 973.242.1364.

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