By Steven J. Shanker, Esq.
Last month, I wrote about certain new theories of liability that are being advanced in the courts of the State of New York against livery and black car bases. The issue is whether a livery base or black car base can be held liable/responsible for the acts of a driver who receives a dispatch from a base when the driver is subsequently involved in a motor vehicle accident that caused injuries to another person. After that article, I received many questions from readers and was asked about other pitfalls that bases should be aware of. I wanted to utilize this article to expand upon the issues I raised in last month’s article. It is my goal to bring more awareness of the outstanding legal issues that livery and black car bases face every day with every single dispatch.
I am always happy to speak to base owners about the for-hire vehicle (FHV) industry. It not only allows me to get to know some new people, but it gives me insight into the operations of the various bases and hence, more knowledge about the FHV industry in general.
I am typically asked if it is necessary to have a contract between a base and the drivers who receive their dispatches. While the New York City Taxi and Limousine Commission (TLC) does not currently require it, I believe one day they will issue new regulations requiring bases to have written contracts with FHV drivers, just as the TLC currently requires fleets that lease/rent vehicles to FHV drivers to have contracts with their lessees.
While a contract is not bulletproof, it is always important to have one. When I say a contract is not bulletproof, I mean that in some instances, just because two parties agree to something in writing does not mean the Courts have to recognize that agreement. For example, many bases that have contracts with their affiliated drivers have a provision that states that the FHV driver is not an employee of the base but is an independent contractor. While this may have been the intent of the base and driver, a Court would determine if a relationship is that of employer and employee or independent contractor based upon a variety of factors. No one factor is determinative of the issue.
The factual issue in determining the nature of a relationship between the base and a FHV driver is how much direction and control a base exerts over the FHV driver.
Control over a driver in the context of the FHV industry can be complex. Some indicia of control over the driver is not control by the base over the driver, but the requirement that each base complies with the TLC regulations to do certain things. For example, the outside world looks at the FHV industry and says that the base controls the drivers because it is the base that gets the customers. While the base does get the customers for the driver to transport, it is the TLC regulations and not the rules of any base that mandate that no livery or black car driver provides transportation to anyone other than by prearrangement via a licensed base. Also, the base markings on a livery vehicle may indicate to the outside world that the vehicle is owned by the base because the name of the base is on the FHV. The reality is that base markings are placed on livery vehicles because the TLC mandates it.
Next, to the outside world, it may seem like a driver is an employee of the base because the base pays the driver. The reality is that the base pays the drivers today because we now live in a relatively cashless world. In the old days, when people paid for things in cash more frequently, it was the driver that had to pay the base after the driver was paid by the customer. Today, with over 100,000 FHV drivers, most of them do not know how to set up a merchant account to get paid via credit card and even if they did, other problems would ensue.
For example, if I booked a trip via ABC Livery Base and paid by credit card, I would expect to see the name of the base on my credit card statement. If I obtained my credit card statement a month after the trip and saw a charge from someone I did not know, I would likely dispute the charge. I typically don’t recall the name of every driver who provides me with a trip in their FHV, and my inability to recall their name would cause problems for me, the driver, and the base.
FHV drivers are in the business of providing transportation and not in providing credit card processing services. It’s just easier to have the base use their chosen credit card processor so the name of the company on the credit card statement is consistent with the trip that was booked via the customer’s base of choice. Putting it all into this context makes the payment by the base to the driver a logical choice that is a business decision on the part of the base and the driver.
I was once asked this question by a judge when I was arguing a case on behalf of a base. The Judge said, “How can the driver be an independent contractor when the base sets the price of the trip?”
My response was simple: “Could you imagine getting into a FHV and agreeing to a price with the driver before the trip starts, only to have an argument about what that price was at the end of the trip?”
I said that the TLC sets up the system where the base is the mandatory intermediary between the driver and the customer primarily for the protection of the customer. In the livery world, the TLC requires the base to give the prospective customer a binding price quote. This is not an indicium of employment but an aspect of the FHV industry as set up and mandated by the TLC.
Overall, the issue of whether a driver is an independent contractor or employee is a fact-intensive inquiry that is only determined after looking at a multitude of factors in the dynamics of the relationship between the base and the FHV driver. So, the answer to the question is that a written contract with a driver evidencing an agreement between the driver and the base that the driver is an independent contractor is one of the factors that Courts and administrative agencies like the Department of Labor look at. The contract is not determinative of the issue, but it helps when the base reduces their working relationship with the driver to writing.
A contract between the base and driver helps to memorialize what that relationship consists of and ensures there is a meeting of the minds between the base and the driver. Like any other contract, it is never a good idea to draft one yourself. Remember the old adage, “He who represents himself has a fool for a client.”
It is also not advisable to go on some legal-related website and pull up a form contract. Some form contracts are worse than having no contract at all. Likewise, doing a Google search to find some template for a contract would be a waste of time. I guarantee that a search on Google for “contract between FHV driver and FHV base” will yield either no results or no good results. I understand that people don’t want to pay for a lawyer when they don’t think it is necessary but remember the old quote from Benjamin Franklin when he famously advised fire-threatened Philadelphians in 1736 that, “an ounce of prevention is worth a pound of cure.” Clearly, preventing fires is better than fighting them.
Recently, I obtained hard proof of why a contract between a base and a driver is essential. In a court case I am defending relative to a motor vehicle accident involving an FHV, the attorney representing the injured party claimed the base entered into a joint venture with the driver. Under joint venture liability, the base would be jointly liable with the driver for the negligent acts of the driver in the use and operation of his vehicle.
What a joint venture consists of is beyond the scope of this article, but suffice to say, no base and driver is engaged in a joint venture in the FHV industry in NYC. In my case, I had a contract between the base and driver that clearly said, “No joint venture.” The Judge threw out the claim when he saw that wording in the contract; it was that simple.
If not for that written contract, there would have been years of costly litigation. Every defendant in such a case wants to get out as fast and easily as possible. As I have stated before, while the injured Plaintiff must prove their case at trial, if a base seeks to get out of the case and have it dismissed, the base must prove their case before trial. A trial is a very costly endeavor that no base owner should ever want to engage in.
It is essential for each base owner to not only know their potential liabilities with each dispatch but to have a plan of action in place in the event they are sued as a result of a motor vehicle accident. A contract between the base and driver will go a very long way to ensure that in the event the base is sued, the base is ready, willing, and able to defend itself in Court. Every base owner should not ignore their potential problems. Ignorance and blind faith never make problems and potential problems go away. It is always wise to hope for the best but to prepare for the worst.