Employment Sec. Com'n of Wyoming v. Laramie Cabs, Inc.

• Decision Date: 31 May 1985
• Docket Number: No. 84-71,84-71
• Citation: 700 P.2d 399
• Parties: EMPLOYMENT SECURITY COMMISSION OF WYOMING, Appellant (Defendant-Respondent), v. LARAMIE CABS, INC., Appellee (Plaintiff-Petitioner).
• Court: Wyoming Supreme Court

Page 399

700 P.2d 399

EMPLOYMENT SECURITY COMMISSION OF WYOMING, Appellant (Defendant-Respondent), v. LARAMIE CABS, INC., Appellee (Plaintiff-Petitioner).

No. 84-71.

Supreme Court of Wyoming.

May 31, 1985.

Carl J. Hildebrand, Sp. Asst. Atty. Gen., Employment Sec. Com'n of Wyoming, Casper, for appellant (defendant-respondent).

No appearance for appellee (plaintiff-petitioner).

Before THOMAS ^*, C.J., and ROSE, ROONEY ^**, BROWN and CARDINE, JJ.

ROSE, Justice.

The sole issue raised in this appeal is whether the taxicab drivers who lease cabs from appellee Laramie Cabs, Inc. in exchange for a percentage of the fares are employees under the terms of the Wyoming Employment Security Law, §§ 27-3-101 through 27-3-704, W.S.1977. Appellant Employment Security Commission of Wyoming classified these workers as employees and required appellee to contribute to the unemployment compensation fund on their behalf. The district court overturned the agency's action on the ground that Laramie Cabs lacked sufficient control over the drivers, either in fact or under the lease agreement, for the drivers to qualify as employees under the employment security law.

While we agree with the district court's determination that the drivers performed their services outside the control of Laramie Cabs, that finding alone does not determine the workers' employment status under the law. We will hold that Laramie Cabs failed to carry its burden of establishing that the taxicab drivers were not in its employment, as that term is defined in § 27-3-104(b), W.S.1977, of the employment security law. We will, therefore, reverse the decision of the district court and reinstate the final action of the Employment Security Commission of Wyoming, which requires appellee to contribute to the unemployment compensation fund according to the wages earned by the taxicab drivers.

FACTS

In the summer of 1982, Robert Sullivan, president of Laramie Cabs, Inc., notified the Employment Security Commission of Wyoming (ESC or Commission) that he considered his taxicab drivers to be independent contractors and that he wished to discontinue payments on their earnings to the unemployment compensation fund. Sullivan prepared a lease agreement under which Laramie Cabs would lease its vehicles to licensed taxicab operators, who would enjoy "complete discretion" in performing the duties generally associated with the taxicab business.

The field auditor and the contributions audit section of ESC determined that the leasing arrangement did not suffice to alter the status of the drivers as employees under the employment security law. Laramie Cabs appealed that decision to the Commission and requested a hearing pursuant to § 27-3-502, W.S.1977. ¹ Prior to the hearing, Laramie Cabs began operating under the lease agreements. Accordingly, by the time of the employer liability hearing on March 1, 1983, appellee was able to present evidence of the actual working conditions under the new lease agreements.

The Lease Agreement

The Taxicab Lease Agreement provides for Laramie Cabs to lease its radio-equipped vehicles to licensed operators and to maintain the cabs and equipment in good "2. Services: Lessor agrees to make available telephone call service, radio service, and to furnish repair and maintenance service in connection with the operation of said leased taxicab. Lessor agrees to notify the various lessees of its taxicabs of calls received from persons desiring transportation upon an impartial basis in rotation or by notifying lessee of that taxicab which is nearest the location of the call."

working condition. Laramie Cabs further agrees to furnish all gas, oil, antifreeze, and tires, to maintain liability insurance, and to assume responsibility for all licenses, taxes and fees for each vehicle. Paragraph 2 obligates the company to notify the drivers by radio or telephone of potential passengers:

In exchange for these services, supplies and equipment, the lessees-drivers agree to pay Laramie Cabs 60 percent of the fares collected each day and to abide by the company's rate schedule. The drivers further agree to operate the leased cabs reasonably, courteously, and lawfully and to test the equipment each day:

"9. Operate Carefully and Lawfully: In order to protect lessor's good will and licenses, lessee agrees to conduct himself (or herself) and to operate said taxicab reasonably, prudently, gentlemanly and courteously in a careful manner and in conformity with all laws, ordinances and regulations of the United States, the State of Wyoming and the City of Laramie and any political subdivision thereof, it being expressly understood between the parties hereto that once the lessee takes possession of the taxicab, he will exercise complete discretion in the operation of same and in the performance of those duties tenerally [sic] recognized to be part of performing taxicab services. Discretion in the operation of the said taxicab is vested in the lessee and the lessor shall do no more than make available to lessee telephone call service or radion [sic] service of prospective passengers; lessee further agrees to return said taxicab to lessor at the end of each 24 hour term in as good a condition and repair as it was when received by lessee, reasonable use and ordinary wear and tear excepted. Lessee further agrees to inspect his (or her) taxicab at the beginning of each term, that he will test the brakes, both foot and emergency, lights, signal lights and all other equipment; if lessee notes any defects, he shall immediately report said defects to lessor."

The lease agreement may be canceled by either party upon written notice:

"6. Term: The term of this lease is for a period of twenty-four hours, but this lease shall be automatically renewed for a period of 24 hours per day from day to day under the same terms and conditions as stated herein unless one of the parties to this lease gives notice to the other party in writing that this lease shall not be renewed."

Finally, the agreement purports to establish the drivers as independent contractors, ineligible for unemployment benefits:

"11. Status of Lessee: By this agreement the lessor and the lessee acknowledge and agree that there does not exist between them the relationship of employer-employee, principal-agent, or master-servant, either express or implied, but that the relationship of the parties hereto is strictly that of lessor-lessee, the lessee being an independent contractor free from interference or control on the part of the lessor in the operation of said taxicab, subject only to adherence to applicable statutes and ordinances of the state, county and city in which said lessee operates equipment leased from lessor.

"12. Unemployment Insurance: Inasmuch as the relationship between the parties hereto is that of lessor and lessee, lessor shall not make any remittances for unemployment insurance and lessee shall not make any application for benefits under the Unemployment Compensation Act of the State of Wyoming upon the termination of this lease."

Actual Working Conditions

Laramie Cabs, the only taxicab service based in Laramie, holds a city license to Laramie Cabs obtains almost all of its business from patrons who contact the company by telephone. The dispatcher notifies the nearest driver, who can refuse to take the fare if he chooses. When that occurs, another driver, Sullivan or his wife transports the customer. Sullivan testified that each driver sets the days and hours which he wishes to work. The drivers enjoy some personal use of the leased vehicles, but must return the cabs to a central location when they are not available to drive for an extended period of time. Each driver pays his own fines for traffic violations as well as the liability-insurance surcharges which result from such violations.

provide intracity transportation and a permit from the Wyoming Public Service Commission to operate within the state. Sullivan, the company president, testified that he maintains a list of persons who have been licensed by the City of Laramie to drive taxicabs. When a cab becomes available for lease, the company enters into an agreement with one of these eligible drivers.

Laramie Cabs presented evidence to establish that other governmental agencies, including the United States Department of Labor and the Internal Revenue Service, have recognized taxicab drivers as independent contractors under the type of lease agreement at issue here. Sullivan testified that the Wyoming Workmen's Compensation Division reviewed the company's lease agreement and concluded that the cab drivers were not employees for purposes of the Worker's Compensation Act. Finally, appellee introduced a summary of the results of a national survey of taxicab company operators, prepared by the University of North Carolina, which indicates that in 1982 58 percent of taxicab drivers were independent contractors.

Disposition by the Agency and the District Court

Based on the foregoing evidence presented by appellee at the administrative hearing, ESC determined that the taxicab drivers were employees under the employment security law:

"We conclude that these drivers were subject to direction and control by Laramie Cabs, Inc. Such is indicated by the ability of either party to terminate the relationship at any time without incurring liability, the restrictions on fares and the requirements concerning operating procedures. Also, the usual course of business for Laramie Cabs, Inc., is to provide cab service. It is apparent that the service provided by cab drivers is within that course of business. By necessity, the 'places of business' for Laramie Cabs, Inc., are principally the taxicabs themselves; these services were obviously performed therein by its drivers. In addition, the drivers were not customarily engaged in an independently established trade, occupation, or business. If they wish to drive a taxi in Laramie, Wyoming, they can only work for ...