Nelson v. Yellow Cab Co.

Decision Date20 May 2002
Docket NumberNo. 25467.,25467.
Citation349 S.C. 589,564 S.E.2d 110
CourtSouth Carolina Supreme Court
PartiesDennis NELSON, Deceased Employee, By and Through His Estate, Respondent, v. YELLOW CAB COMPANY, Employer, and Travelers Property Casualty Company, Carrier, Petitioners.

Johnnie W. Baxley, III, of Pratt-Thomas, Epting & Walker, of Charleston, for petitioners.

Carl H. Jacobson, of Uricchio, Howe & Krell, of Charleston, for respondent.

Justice WALLER.

We issued a writ of certiorari to review the Court of Appeals' opinion in Nelson v. Yellow Cab Co., 343 S.C. 102, 538 S.E.2d 276 (Ct.App.2000).

FACTS

Nelson, a cab driver for Yellow Cab, was murdered while driving his cab on January 6, 1998. His estate filed for Workers' Compensation benefits. The single commissioner ruled Nelson was an independent contractor not entitled to benefits; the full commission reversed, finding Nelson was an employee. The circuit court reversed the full commission, finding him an independent contractor; the Court of Appeals reversed the circuit court, finding Nelson was an employee entitled to compensation.

As stated by the Court of Appeals, the relationship of Nelson and Yellow Cab was as follows:

Yellow Cab hired Nelson in 1995 as a part-time taxi driver. During his tenure at Yellow Cab, Nelson gradually increased the number of shifts he worked. In addition, Nelson was employed as a postal worker.
On January 6, 1998, Yellow Cab dispatched Nelson to pick up a passenger in North Charleston for transport to the West Ashley area. Nelson was murdered, apparently by the passenger. The sole question to be determined on appeal is whether Nelson was an employee or an independent contractor of Yellow Cab at the time of his death.
Yellow Cab requires taxi drivers to file an application for employment. The application form reads:
This is to certify that although I drive a taxicab owned and/or operated by Yellow Cab Company ... I am in no way employed by the company:1 that I receive [sic] no salary or other compensation from the company, and that my only financial relationship with the company is to pay rent on the cab I drive, to pay for the gasoline used by me on my shift, and to return the cab with all keys and equipment in good condition at the end of my shift. In consideration of the expense in my training and indoctrination, I agree and understand that I must drive a company car owned by Yellow Cab Co. and not a terminal fee contractor for at least six months after my indoctrination period.
All drivers must sign the application before working for Yellow Cab.
In conflict with the relationship expressed in the application form, Yellow Cab exercises control over the driver's behavior while in the taxi, and the manner in which the drivers perform their jobs. Yellow Cab's "Drivers Information and Training Package" includes numerous rules and regulations governing the drivers. For instance, although there is no uniform for the drivers, Yellow Cab imposes a dress code, prohibiting unbuttoned and/or sleeveless shirts, and requiring a neat, orderly appearance. Failure to observe the dress code is a ground for termination of employment.
Further, in accordance with fares set by the City of Charleston, Yellow Cab mandates a set fare, and drivers must transport four people for the price of one fare. The drivers are bound to use a Yellow Cab meter as opposed to an Ever Ready Dispatch, or charging flat rates. Yellow Cab is the only cab company in the area that uses meters to establish taxi fares. Yellow Cab acknowledged that a driver's failure to use a Yellow Cab meter constitutes a ground for termination. The drivers are subject to the Yellow Cab rule prohibiting drivers from transporting non-paying passengers ("dead-heading"). Yellow Cab admitted dead-heading by a driver was cause for termination.
There are numerous other grounds for termination of a taxi driver by Yellow Cab including: possessing a weapon of any kind in the taxi; drinking or using drugs while operating the taxi; failing to deliver packages; and filing a false application. Yellow Cab conceded it could fire a driver for any reason.
The drivers generally retain their fares. However, Yellow Cab makes payments to the drivers under special fare situations in which a driver picks up a certain fare or package, a blue card is issued by the company calling for the pickup, and the driver turns the card into Yellow Cab for payment. These customers are charge account customers billed directly by Yellow Cab. Yellow Cab neither withholds taxes from the drivers' fares nor issues W-2 or 1099 forms to the drivers. On his tax return, Nelson reported his taxi fares as income from a sole proprietorship.
The drivers lease their taxis from Yellow Cab, paying for either twelve or twenty-four hour shifts. Nelson leased his taxi for twenty-four hour shifts at $79 per day. The taxis are painted yellow and identified as Yellow Cab vehicles. Yellow Cab furnishes the radio and use of the dispatch service. The drivers pay for their own gas. The company pays for insurance, a portion of which is collected from the drivers, and repairs on the vehicles.
The drivers select the number of hours they want to work during the twenty-four hour shift. Whenever a driver checks in as operating the vehicle as a taxi, he is required to have the radio on and respond to the dispatcher. Yellow Cab allows the drivers to earn "vacation," which is paid in the form of Yellow Cab giving a car to a driver without requiring lease fees. Once the drivers pay the lease fee, they are entitled to personal use of the taxi whenever they are not checked in as operating the vehicle.
On the evening Nelson was murdered, Nelson was dispatched by a Yellow Cab dispatcher to pick up the fare.

ISSUE

Did the Court of Appeals err in ruling Nelson was an employee of Yellow Cab rather than an independent contractor?

DISCUSSION

Workers' compensation awards are authorized only if an employer-employee relationship exists at the time of the injury. Dawkins v. Jordan, 341 S.C. 434, 534 S.E.2d 700 (2000). Whether or not an employer-employee relationship exists is a jurisdictional question. Id.; South Carolina Workers' Compensation Comm'r v. Ray Covington Realtors, Inc., 318 S.C. 546, 459 S.E.2d 302 (1995). Where the issue involves jurisdiction, this Court can take its own view of the preponderance of the evidence. Id. It is South Carolina's policy to resolve jurisdictional doubts in favor of the inclusion of employers and employees under the Workers' Compensation Act. Id.

Whether a worker is an employee or independent contractor is a fact-specific matter resolved by applying certain established principles. "The general test applied is that of control by the employer. It is not the actual control then exercised, but whether there exists the right and authority to control and direct the particular work or undertaking, as to the manner or means of its accomplishment." Young v. Warr, 252 S.C. 179, 189, 165 S.E.2d 797, 802 (1969). The Young Court stated,

An independent contractor is one who, exercising an independent employment, contracts to do a piece of work according to his own methods, without being subject to the control of his employer except as to the result of his work.... [W]here one who performs work for another represents the will of that other, not only as to the result, but also as to the means by which the result is accomplished, he is not an independent contractor but an agent....

Id. at 189, 165 S.E.2d at 802. There are four elements which determine the right of control: 1) direct evidence of the right or exercise of control; 2) furnishing of equipment; 3) right to fire; and 4) method of payment. Dawkins, supra; Tharpe v. G.E. Moore Co., 254 S.C. 196, 174 S.E.2d 397 (1970). These factors, however, go only to the right of control. As we noted in Dawkins,

[F]or the most part, any single factor is not merely indicative of, but, in practice, virtually proof of, the employment relation; while, in the opposite direction, contrary evidence is as to any one factor at best only mildly persuasive evidence of contractorship, and sometimes is of almost no such force at all. 3 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law, § 61.04 (2000).

341 S.C. at 439, 534 S.E.2d at 703.

As noted by the Court of Appeals in this case, there is a split of authority on whether a taxi driver, who leases a taxicab under a per diem payment agreement and keeps his fares and tips as compensation, is an employee or independent contractor. The majority of cases hold that under such circumstances, the cab driver is an employee by virtue of the cab company's exercise of control. See Central Management v. Industrial Comm'n of Arizona, 162 Ariz. 187, 781 P.2d 1374 (1989)

; Yellow Cab Co. v. Workers' Comp. Appeal Board, 226 Cal.App.3d 1288, 277 Cal.Rptr. 434 (1991); Bowdoin v. Anchor Cab, 643 So.2d 42 (Fla.Dist.Ct.App.1994); Yellow Cab Co. v. Karwoski, 226 Ga.App. 63, 486 S.E.2d 39 (1997); Yellow Cab Co. v. Industrial Comm'n, 124 Ill.App.3d 644, 80 Ill.Dec. 96, 464 N.E.2d 1079 (1984); Purchase Transp. Svcs. v. Estate of Wilson, 39 S.W.3d 816 (Ky.2001); White Top and Safeway Cab Co. v. Wright, 251 Miss. 830, 171 So.2d 510 (1965); Walls v. Allen Cab Co., 903 S.W.2d 937 (Mo.App.E.D.1995); Hemmerling v. Happy Cab Co., 247 Neb. 919, 530 N.W.2d 916 (1995); Petition of City Cab of Manchester, 139 N.H. 220, 652 A.2d 1202 (1994); Naseef v. Cord, Inc., 48 N.J. 317, 225 A.2d 343 (1966); Scott v. Manzi Taxi Svcs, 179 A.D.2d 949, 579 N.Y.S.2d 225 (1992); Yellow Cab Co. v. Wills, 199 Okla. 272, 185 P.2d 689 (Ok.1947); Nesbit v. Powell, 558 S.W.2d 436 (Tenn.1977); Dep't of Labor v. Tacoma Yellow Cab Co., 31 Wash.App. 117, 639 P.2d 843 (1982); C & H Taxi Co. v. Richardson, 194 W.Va. 696, 461 S.E.2d 442 (1995).2

Several jurisdictions have held, under certain factual scenarios, that cab drivers are not employees for purposes of...

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