C& H Taxi v. Richardson
Annotate this Case
January 1995 Term
___________
No. 22251
___________
C & H TAXI COMPANY,
A WEST VIRGINIA CORPORATION,
Petitioner Below, Appellant
v.
ANDREW RICHARDSON, COMMISSIONER,
WEST VIRGINIA WORKERS' COMPENSATION FUND,
Respondent Below, Appellee
WEST VIRGINIA PUBLIC SERVICE COMMISSION,
Intervenor
___________________________________________________
Appeal from the Circuit Court of Kanawha County
Honorable Herman G. Canady, Jr., Judge
Civil Action No. 91-AA-135
AFFIRMED, IN PART, REVERSED, IN PART,
AND REMANDED
___________________________________________________
Submitted: January 10, 1995
Filed: June 19, 1995
Michael T. Clifford
Clifford, Mann & Swisher, L.C.
Charleston, West Virginia
Attorney for the Appellant
Darrell V. McGraw, Jr.
Attorney General
C. Terry Owen
Deputy Attorney General
Gina K. Karpinski
Assistant Attorney General
Charleston, West Virginia
Attorneys for the Appellee
Thornton Cooper
Charleston, West Virginia
Attorney for the Intervenor
Guy R. Bucci
Janet E. James
Bucci, Chambers & Willis, L.C.
Charleston, West Virginia
Attorneys for Virginia N. Sibe, Amicus Curiae
James D. Kauffelt
Kauffelt & Kauffelt
Charleston, West Virginia
Attorney for the West Virginia
Taxicab Association, Amicus Curiae
This Opinion was delivered PER CURIAM.
JUSTICE BROTHERTON did not participate.
JUDGE FOX sitting by temporary assignment.
RETIRED JUSTICE NEELY participated in consideration and decision
of case.
SYLLABUS BY THE COURT
1. "Upon judicial review of a contested case under the
West Virginia Administrative Procedure Act, Chapter 29A, Article 5,
Section 4(g), the circuit court may affirm the order or decision of
the agency or remand the case for further proceedings. The circuit
court shall reverse, vacate or modify the order or decision of the
agency if the substantial rights of the petitioner or petitioners
have been prejudiced because the administrative findings,
inferences, conclusions, decisions or order are: '(1) In violation
of constitutional or statutory provisions; or (2) In excess of the
statutory authority or jurisdiction of the agency; or (3) Made upon
unlawful procedures; or (4) Affected by other error of law; or (5)
Clearly wrong in view of the reliable, probative and substantial
evidence on the whole record, or (6) Arbitrary or capricious or
characterized by abuse of discretion or clearly unwarranted
exercise of discretion.'" Syl. pt. 2, Shepherdstown V.F.D. v.
Human Rights Commission, 172 W. Va. 627, 309 S.E.2d 342 (1983).
2. "To ascertain whether a workman is an employee or an
independent contractor each case must be resolved on its own facts
and ordinarily no one feature of the relationship is controlling,
but all must be considered together." Syl. pt. 1, Myers v.
Workmen's Compensation Commissioner, 150 W. Va. 563, 148 S.E.2d 664
(1966).
3. "In determining whether a workman is an employee or
an independent contractor, the controlling factor is whether the hiring party retains the right to control and supervise the work to
be done." Syl. pt. 2, Myers v. Workmen's Compensation
Commissioner, 150 W. Va. 563, 148 S.E.2d 664 (1966).
4. "In determining whether one is an employee or an
independent contractor within the meaning of the workmen's
compensation act, the act must be given a liberal construction in
favor of the workman and any doubt is to be resolved in favor of
his status as an employee, rather than an independent contractor."
Syl. pt. 4, Myers v. Workmen's Compensation Commissioner, 150 W.
Va. 563, 148 S.E.2d 664 (1966).
Per Curiam:
This case is before this Court upon an appeal by C & H
Taxi Company (hereinafter "C & H") from the final order of the
Circuit Court of Kanawha County, entered on January 26, 1994.
Pursuant to that order, the circuit court affirmed the May 22,
1991, decision and order of the Commissioner of the West Virginia
Workers' Compensation Fund that the relationship between C & H and
its taxicab drivers is that of employer-employee for workers'
compensation purposes and that, accordingly, C & H is required to
pay workers' compensation premiums for the benefit of those
drivers. For the reasons stated below, the final order of the
Circuit Court of Kanawha County is affirmed, in part, and reversed,
in part, and this case is remanded.
It should be noted that, in addition to the material
submitted by C & H and the Commissioner, this Court permitted the
West Virginia Public Service Commission to intervene in this case.
In addition, briefs amicus curiae have been received from Virginia
N. Sibe, Administratrix of the Estate of John L. Sibe, deceased,
and from the West Virginia Taxicab Association.
I
Pursuant to chapters 24 and 24A of the West Virginia
Code, the operation of taxicabs in this State is regulated by the
West Virginia Public Service Commission. W. Va. Code, 24-2-1
[1991]; W. Va. Code, 24A-1-1 [1987]; W. Va. Code, 24A-1-2 [1991].
For a number of years, C & H, pursuant to a certificate of
convenience and necessity issued by the Public Service Commission, has operated a taxicab company in the Kanawha County, West
Virginia, area involving some seventy-five to eighty drivers.
Initially, all taxicab drivers in West Virginia were
required to be employees of their respective companies. However,
largely as the result of a financial decline in the taxicab
industry, the West Virginia Taxicab Association petitioned the
Public Service Commission for another option by which to do
business. That petition resulted in the adoption by the Public
Service Commission, in 1981, of P.S.C. W. Va. M.C. Form No. 55
(hereinafter "lease form no. 55"). Thereafter, through the use of
lease form no. 55, many taxicab companies in West Virginia
converted their employee drivers to lessees. To convert to the
lease-type arrangement with regard to taxicab drivers, the use of
lease form no. 55 is mandatory.
In January 1986, C & H elected to adopt lease form no. 55
with regard to each of its taxicab drivers. Although several
versions of the lease appear in the record, the lease in use during
the period in question provided, inter alia, that C & H, the
lessor, would provide to the taxicab driver, the lessee, a taxicab
"in good working order," upon which would appear the lessor's
insignia, and the lessor would, further, provide tires, servicing
and maintenance for the vehicle and the required license tags,
registration and automobile liability insurance. In addition,
C & H, the lessor, agreed to provide radio dispatch service to the
lessee. Under the lease, the taxicab driver, the lessee, was not
required to accept the radio dispatch calls, although C & H, under Public Service Commission regulations, remained obligated to insure
that the public would not be denied taxicab service. Furthermore,
C & H, the lessor, agreed to lease the vehicle to the lessee at a
fixed rate for various hourly periods.
Under lease form no. 55, the taxicab driver, the lessee,
agreed to provide gasoline for the vehicle and, further, agreed not
to sublease the vehicle. During each lease period, the vehicle was
to remain "in the exclusive custody and absolute control of the
Lessee." Other provisions of the lease stated:
In order to protect Lessor's good will
and license, the Lessee shall keep
himself/herself and said taxicab in a neat and
clean condition and agrees to conduct
himself/herself and operate said taxicab
reasonably, prudently, courteously, and in a
careful manner[.] . . . 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 radio service of prospective
passengers.
. . . .
Lessee agrees to be bound by all the
rules and regulations applicable to motor
vehicles transporting passengers and property
in taxicab service as prescribed by the Public
Service Commission of West Virginia.
Violations of said rules shall be sufficient
cause for Lessor not to enter into any future
taxicab rental agreements with the Lessee.
. . . .
Lessee agrees to be bound by and charge
only those rates and charges approved by the
Public Service Commission of West Virginia for
the operation of the Leased vehicle. Failure
to charge the approved rates and charges shall
be sufficient cause for Lessor not to enter
into any future taxicab rental agreements with
the Lessee.
With regard to the latter provision, lease form no. 55
required the taxicab driver, the lessee, to submit to C & H, at the
end of each lease period, a manifest which, as the Public Service
Commission explained, sets forth every passenger trip consummated
by the taxicab driver and the charges therefor.
In addition to the above, lease form no. 55 contains the
following additional provision which has become the focus of this
litigation:
By this agreement the Lessor and 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 between the parties hereto is
strictly 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, and subject only to
adherence to applicable rules and regulations
of the Public Service Commission of West
Virginia, [s]tatutes and ordinances of the
State of West Virginia, and County or
Municipality in which the Lessee operates the
equipment Leased from Lessor. Lessee further
acknowledges that as an independent
contractor, free from authority and control of
the Lessor, he is not covered by Workmen's
Compensation insurance provided by the Lessor,
and that he expressly waives any such coverage
as a condition to his independent status:
further, that no withholding will be made by
Lessor for Federal, State or City income
Taxes, or Social Security payments, or for any
other taxes, and that the Lessee will be
liable for payment of said taxes. If the
Lessor is called upon to pay any charges
assumed herein . . . the Lessee will reimburse
the Lessor upon demand. Lessor shall not be
responsible for any injury to Lessee resulting
from the use of or operation of said taxicab, and the Lessee will insure himself against
such injury if he desires such insurance.See footnote 1
(emphasis and footnote added).
C & H maintains that, under lease form no. 55, it derives
income solely from the lease payments of the taxicab drivers and
not from the fares the drivers charge the passengers.
II
By amended notice dated July 27, 1990, the Commissioner
of the Workers' Compensation Fund notified all taxicab employers
that, effective July 1, 1990, all drivers operating under lease
form no. 55 "are presumed to be employees and are not independent
contractors under the West Virginia Workers' Compensation Act."
The notice further provided that "[t]he wages or other compensation
of these workers must be reported to the Workers' Compensation
Fund."
Pursuant to W. Va. Code, 23-2-17 [1990], C & H filed a
formal objection to the Commissioner's determination that the lease
arrangement subjected it to the payment of workers' compensation premiums for the benefit of the taxicab drivers. Thereafter, on
December 13, 1990, an evidentiary hearing was conducted before the
Workers' Compensation Fund. By decision dated May 22, 1991, the
Commissioner determined the relationship between C & H and its
taxicab drivers to be that of employer and employee for workers'
compensation purposes and that C & H was properly classified for
workers' compensation premium rate purposes as class L-49,
industrial code 7370, Taxicab Operations. Furthermore, the
Commissioner determined that C & H was required to comply with the
amended notice and "report the wages or other compensation of all
persons employed as taxicab drivers under Taxicab Lease Agreement,
P.S.C., W. Va. M.C. Form No. 55, beginning July 1, 1990, and
thereafter, and remit workers' compensation premiums thereon[.]"
The Commissioner's decision of May 22, 1991, adopted the
recommended decision of the Workers' Compensation Fund Hearing
Examiner who conducted the evidentiary hearing of December 13,
1990. Determining that C & H had a "right to control" its taxicab
drivers, the Hearing Examiner concluded that the taxicab drivers
were employees rather than independent contractors. In particular,
in addition to citing the provisions of lease form no. 55 in
support of the recommended decision, the hearing examiner also
indicated, inter alia, that (1) the taxicab drivers had never been
able to negotiate the lease rate with C & H, (2) sixty to seventy
percent of the taxicab drivers currently employed have leased
taxicabs regularly for one year or longer, (3) taxicabs, generally,
are made available by C & H to its drivers upon the basis of senioritySee footnote 2 and (4) in the event of complaints by passengers of
overcharging, C & H requires the taxicab driver to pay the money
back to the passenger. The hearing examiner concluded:
The petitioner is not in the business of
simply leasing automobiles with no further
interest in their operation as taxicabs.
Certainly, insofar as carrying on the business
of providing a taxi service, the taxicab
drivers' participation is an integral part of
the petitioner's business. Therefore, based
on review of the evidence adduced in this
matter, and in accordance with the Findings of
Fact and Conclusions of Law set forth herein,
it is the finding and decision of this Hearing
Examiner that the petitioner has failed to
overcome the legally valid presumption that
its taxicab drivers are employees and not
independent contractors[.]
Pursuant to W. Va. Code, 23-2-17 [1990], and W. Va. Code,
29A-5-1 [1964], et seq., C & H appealed from the Workers'
Compensation Fund to the Circuit Court of Kanawha County. By final order entered on January 26, 1994, the circuit court affirmed the
Commissioner and concluded:
C & H's right to terminate or not to renew the
lease, coupled with C & H's ownership and
maintenance of the taxicabs used by the
drivers are determinative factors in this
Court's conclusion.
C & H's argument is that any control they
exercise is government mandated by C & H's
Public Service Commission certificate. This
argument is pretextual. The certificate
itself presumes supervision by C & H. There
is a presumed right to control and C & H has
not shown that supervision is entirely absent.
In its appeal to this Court, the principal argument of
C & H is that its use of lease form no. 55, the provisions of which
were promulgated by the West Virginia Public Service Commission,
does not constitute a "right to control" by C & H over its taxicab
drivers sufficient to create an employer and employee relationship
for workers' compensation purposes. Furthermore, C & H argues, a
determination that taxicab drivers operating under lease form no.
55 are not independent contractors would have a deleterious effect
upon West Virginia taxicab companies, including C & H, in view of
an economic decline in the taxicab industry.
III
At the outset, we note that this litigation progressed
through the Circuit Court of Kanawha County and upon appeal to this
Court under the provisions of the West Virginia Administrative
Procedures Act. W. Va. Code, 23-2-17 [1990]; W. Va. Code, 29A-5-1
[1964], et seq. As we stated in syllabus point 2 of Shepherdstown V.F.D. v. Human Rights Commission, 172 W. Va. 627, 309 S.E.2d 342
(1983):
Upon judicial review of a contested case
under the West Virginia Administrative
Procedure Act, Chapter 29A, Article 5, Section
4(g), the circuit court may affirm the order
or decision of the agency or remand the case
for further proceedings. The circuit court
shall reverse, vacate or modify the order or
decision of the agency if the substantial
rights of the petitioner or petitioners have
been prejudiced because the administrative
findings, inferences, conclusions, decisions
or order are: '(1) In violation of
constitutional or statutory provisions; or (2)
In excess of the statutory authority or
jurisdiction of the agency; or (3) Made upon
unlawful procedures; or (4) Affected by other
error of law; or (5) Clearly wrong in view of
the reliable, probative and substantial
evidence on the whole record, or (6) Arbitrary
or capricious or characterized by abuse of
discretion or clearly unwarranted exercise of
discretion.'
See also syl. pt. 1, Smith v. Workers' Compensation Fund, 190
W. Va. 573, 439 S.E.2d 438 (1993); syl. pt. 1, CDS, Inc. v. Camper,
190 W. Va. 390, 438 S.E.2d 570 (1993); syl. pt. 1, Smith v.
Bechtold, 190 W. Va. 315, 438 S.E.2d 347 (1993). Moreover, we have
recently recognized that rulings upon questions of law are reviewed
de novo. Stephen L. H. v. Sherry L. H., No. 22084, ___ W. Va. ___,
___ n. 19, ___ S.E.2d ___, ___ n. 19 (Mar. 6, 1995); State v.
Honaker, ___ W. Va. ___, ___, 454 S.E.2d 96, 101 (1994); Adkins v.
Gatson, ___ W. Va. ___, ___, 453 S.E.2d 395, 399 (1994); State v.
Stuart, ___ W. Va. ___, ___, 452 S.E.2d 886, 891 (1994); syl. pt.
3, Committee on Legal Ethics v. McCorkle, ___ W. Va. ___, 452 S.E.2d 377 (1994).
General definitions of "employer" and "employee" are
found in this State's workers' compensation statutes. In W. Va.
Code, 23-2-1 [1991], it is stated that "all persons, firms,
associations and corporations regularly employing another person or
persons for the purpose of carrying on any form of industry,
service or business in this state, are employers . . . and are
hereby required to subscribe to and pay premiums into the workers'
compensation fund for the protection of their employees[.]"
Likewise, W. Va. Code, 23-2-1a [1991], states that "[e]mployees
subject to this chapter are all persons in the service of employers
and employed by them for the purpose of carrying on the industry,
business, service or work in which they are engaged[.]"
More helpful, however, is this Court's analysis in Myers
v. Workmen's Compensation Commissioner, 150 W. Va. 563, 148 S.E.2d 664 (1966), relied upon by the Commissioner and by the Circuit
Court of Kanawha County. In Myers, a plumbing company engaged the
claimant to do some excavation work at a construction site in Pt.
Pleasant, West Virginia. The work was expected to be completed in
a few hours, and the claimant, providing his own equipment, was
paid upon an hourly basis. The plumbing company inspected the
ongoing excavation work from time to time. The claimant was
injured and sought workers' compensation benefits.
The analysis in Myers begins with the recognition in
syllabus point 1 that "[t]o ascertain whether a workman is an
employee or an independent contractor each case must be resolved on
its own facts and ordinarily no one feature of the relationship is controlling, but all must be considered together." Moreover,
syllabus point 2 states that "[i]n determining whether a workman is
an employee or an independent contractor, the controlling factor is
whether the hiring party retains the right to control and supervise
the work to be done." This Court, in Myers, concluded that the
claimant was an employee of the plumbing company, rather than an
independent contractor, for purposes of workers' compensation. In
so holding, it was determined that the claimant could have been
discharged if the work had not been satisfactory, which "in itself
is an indication of an employer-employee relationship." 150 W. Va.
at 568, 148 S.E.2d at 667. Myers concludes with the following
statement, reflected in syllabus point 4:
In determining whether one is an employee
or an independent contractor within the
meaning of the workmen's compensation act, the
act must be given a liberal construction in
favor of the workman and any doubt is to be
resolved in favor of his status as an
employee, rather than an independent
contractor.
See also syl. pts. 1-3, Barkley v. Workmen's Compensation
Commissioner, 164 W. Va. 777, 266 S.E.2d 456 (1980); Maynard v.
Kenova Chemical, 626 F.2d 359, 362 (4th Cir. 1980); Kirby v. Union
Carbide, 373 F.2d 590, 593 (4th Cir. 1967).
In cases from other jurisdictions concerning whether
taxicab companies, such as C & H, are subject to workers'
compensation statutes, employer-employee relationships are often
found. In Yellow Cab v. Industrial Commission, 124 Ill. App. 3d
644, 80 Ill. Dec. 96, 464 N.E.2d 1079 (1984), the sole issue was
whether an injured claimant, a lease cab driver, was an employee or independent contractor of the taxicab company for purposes of
workers' compensation. The claimant leased a cab upon a twenty-
four hour basis, and the lease agreement disclaimed the parties'
relationship as one of employer and employee. As in this case, the
claimant was not required to answer radio calls, but if he accepted
one, he was expected to follow through with it. As a lease driver,
the claimant was not issued a paycheck or given any withholding tax
forms. In upholding a finding that the claimant was an employee of
the taxicab company for workers' compensation purposes, the Court,
in Yellow Cab, noted:
The cabs, whether driven by lease or
commission drivers, are uniform in appearance
and have the company's name and telephone
number on them. Respondent [company] had the
right to discharge the claimant. It could
terminate or refuse to renew the claimant's 24
hour lease and could refuse to assign claimant
to a cab for various reasons. Claimant was
not permitted to sublease a cab, was
instructed to purchase his gas at the company
garage, and was required to report mileage at
the end of each lease period. Respondent
derives goodwill from the public presence of
both commissioned and leased cabs that are
well maintained. . . . Thus, despite the
lease agreement's employment relationship
disclaimer, the record clearly indicates that
respondent's interest in its cabs did not
cease with their leasing, but extended to
their operation.
464 N.E.2d at 1081-82.
The Illinois Court in the above case addressed this area
of the law again in Yellow Cab v. Industrial Commission, 238 Ill.
App. 3d 650, 179 Ill. Dec. 691, 606 N.E.2d 523 (1992). The latter
case involved a daily lease form which provided that the taxicab
company and the driver did not have an employer-employee relationship, and that the taxicab company did not have the right
to control or supervise the driver in the use of the vehicle. The
Illinois Court, nevertheless, upheld a finding that the taxicab
driver, who had been fatally shot while in his cab, had been an
employee of the company for workers' compensation purposes. The
Court was influenced by such factors as the company's right to
terminate the lease "with or without cause" and the driver's duty
to keep the taxicab company's name upon the vehicle.
A taxicab driver operating a "lease-to-purchase vehicle"
was found to be an employee of the company for workers'
compensation purposes in Central Management Company v. Industrial
Commission, 162 Ariz. 187, 781 P.2d 1374 (1989). In that case, the
Court of Appeals of Arizona stated:
Significantly, operating taxi cabs was
the usual and regular course of CMC's
business. CMC owned four different taxi cab
companies and dispatch operations, as well as
the radio equipment in each cab. Its business
was conducted mostly through these dispatch
operations. CMC was not simply leasing
vehicles which coincidentally were used as
taxi cabs. It was in the business of
operating, maintaining, controlling, and
presenting to the public a fleet of cabs for
public transportation. The claimant's work
was not only an integral part of that business
- it was the essential core of CMC's business.
781 P.2d at 1377-78.
See also Shinuald v. Mound City Yellow Cab, 666 S.W.2d 846 (Mo. Ct. App. 1984) (taxicab company subject to workers'
compensation claim, where driver's work was a "regular and
continuous" part of company's business and "not an independent
business through which it would be feasible to channel the cost of work-connected injury"); Commissioners of the State Insurance Fund
v. Lindenhurst, Green & White, 101 A.D.2d 730, 475 N.Y.S.2d 42
(1984) (IRS ruling that taxicab drivers are not employees of
company is not binding in the context of workers' compensation);
Ziegler v. Fillmore Car Service, 83 A.D.2d 692, 442 N.Y.S.2d 276
(1981) (employer-employee relationship found for workers'
compensation purposes between cab driver and radio dispatching
service, where dispatcher "basically controlled the activities and
work" of the driver); Morgan Cab v. Industrial Commission, 60 Ill. 2d 92, 324 N.E.2d 425 (1975) (workers' compensation claim upheld,
where taxicab company operated a fleet of cabs for public use and
"was not in the business of simply leasing vehicles with no
interest in their operation as taxis"); Golosh v. Cherokee Cab, 226
Ga. 636, 176 S.E.2d 925 (1970) (cab driver found to be employee,
rather than independent contractor, where, although driver could
"evade supervision," the company could discharge the driver for
failing to follow instructions); but see Bowdoin v. Anchor Cab, 643 So. 2d 42 (Fla. Dist. Ct. App. (1994)) (taxicab drivers under daily
lease held employees for workers' compensation purposes, where
company controlled the passenger fare structure); La Grande v. B &
L Services, 432 So. 2d 1364 (Fla. Dist. Ct. App. (1983))
(government regulation in the form of required "trip sheets" and
dress code did not constitute control or supervision by the taxicab
company over its lessee driver).
In the case sub judice, a review of lease form no. 55
amply clarifies a number of features demonstrating that the relationship between C & H and its taxicab drivers, for purposes of
the West Virginia workers' compensation statutes, was one of
employer-employee, within the analysis of this Court in Myers,
supra. Under the lease, C & H had a right to control and supervise
the work of its taxicab drivers, the disclaimers of the lease
concerning the status of the drivers notwithstanding. C & H, for
example, agreed to provide the equipment, i.e. vehicles, to the
taxicab drivers and agreed to service the vehicles, while, in
return, the taxicab drivers agreed to maintain a favorable
appearance and agreed to operate the vehicles in a careful manner.
Importantly, C & H could terminate the relationship for certain
violations by the taxicab drivers. Those features of lease form
no. 55 have been generally recognized in the above-cited
authorities as indicia of an employer-employee relationship, for
workers' compensation purposes.
In this case, however, C & H asserts that its use of
lease form no. 55, the provisions of which were promulgated by the
West Virginia Public Service Commission and are mandatory, does not
constitute a right to control by C & H over its taxicab drivers
sufficient to create an employer-employee relationship for workers'
compensation purposes. We find that assertion unpersuasive.
West Virginia taxicab companies having an interest in the
lease-type arrangement have had considerable input with regard to
lease form no. 55. It was promulgated by the West Virginia Public
Service Commission upon the petition of the West Virginia Taxicab
Association, and that Association was involved in its subsequent amendment. See n. 1, supra. Moreover, C & H obtained a
modification of lease form no. 55 with regard to the lease rate
schedule concerning its drivers. Although the product of a
governmental agency, the purpose of lease form no. 55 is to
accommodate the State taxicab industry by providing that industry
with another option by which to do business. It cannot simply be
said to be an example of burdensome governmental regulatory power
especially in view of the industry's significant input concerning
the development of the provisions of the lease.
Moreover, day-to-day operations under lease form no. 55
indicate an employer-employee relationship for workers'
compensation purposes. Testimony adduced at the December 13, 1990,
evidentiary hearing indicated that, in a year's time, C & H would
execute about 20,000 leases with its taxicab drivers, or
approximately 300 leases per driver, all with regard to time frames
measured largely in hours. Those facts, coupled with the fact that
sixty to seventy percent of the taxicab drivers currently employed
have leased taxicabs regularly for one year or longer, suggest
either an employer-employee relationship, or a very tenuous
independent contractor arrangement. That C & H tends to make some
vehicles available to drivers who have associated with C & H the
longest, see n. 2, supra, and that C & H makes drivers pay money
back to passengers in the event of overcharging, a fortiori,
demonstrates an employer-employee relationship for workers'
compensation purposes.
Driving a taxicab, by its very nature, does not lend
itself to constant supervision. However, the record in this case
supports the conclusion of the hearing examiner that C & H "is not
in the business of simply leasing automobiles with no further
interest in their operation as taxicabs." Consequently, inasmuch
as the record contains facts demonstrating that the relationship
between C & H and its taxicab drivers is that of employer-employee
for workers' compensation purposes, we affirm the final order of
the Circuit Court of Kanawha County.
In so holding, this Court is aware of the economic
hardships currently facing the taxicab industry in West Virginia.
Factors other than workers' compensation responsibility, however,
such as competing forms of transportation, may have made that
business more difficult. Nevertheless, this Court is also aware of
the statistically demonstrated danger associated with driving a
taxicab. Workers' compensation coverage, as well as the lease-type
arrangement, may ultimately prove to be a stabilizing factor.
Finally, we recognize that, if the decision of the
Circuit Court of Kanawha County is affirmed in its entirety, then,
pursuant to the notice of the Commissioner, the liability of C & H,
and perhaps other taxicab companies in West Virginia, for workers'
compensation premiums would commence as of July 1, 1990, nearly
five years ago. This case has been in litigation since that time.
Although the record is clear that the West Virginia
Public Service Commission never intended to erode or interfere with
the authority of the Workers' Compensation Fund in this area, see n. 1, supra, the provisions of lease form no. 55, and its prior and
subsequent history have resulted in a degree of confusion, though
well intended by the Public Service Commission and adhered to in
good faith by the taxicab industry in this State. In fact, the
Workers' Compensation Fund itself participated in the amendment of
lease form no. 55, and the amended language is ambiguous with
respect to the issues of driver status and workers' compensation
coverage. The confusion and ambiguity surrounding the lease have
masked the foreshadowing of our ruling today. It is undisputed
that C & H has acted in good faith and has, while adhering to all
applicable regulations, legitimately asserted that its taxicab
drivers were independent contractors.
Accordingly, we reverse that part of the decision of the
Circuit Court of Kanawha County which upholds July 1, 1990, as the
date of the liability of C & H for workers' compensation premiums.
Moreover, this question consisting of a mixture of law and fact,
our review of this matter is plenary and de novo, Adkins, supra,
453 S.E.2d at 400, syl. pt. 3, McCorkle, supra. Upon all of the
circumstances of this case, therefore, the determination that the
relationship between C & H and its taxicab drivers, under lease
form no. 55, is that of employer-employee for workers' compensation
purposes shall be effective from the date of the mandate of this
Court in this case. The taxicab drivers of C & H are independent
contractors for workers' compensation purposes prior to the date of
the mandate, and this case is remanded to the Circuit Court of
Kanawha County for proceedings consistent with this opinion. It is recommended that the parties consider a new date for the
commencement of workers' compensation premium payments, subsequent
to the mandate in this case, and, in addition, whether a need
exists to further amend lease form no. 55.
Upon all of the above, the final order of the Circuit
Court of Kanawha County, West Virginia, entered on January 26,
1994, is affirmed, in part, and reversed, in part, and this case is
remanded to the Circuit Court of Kanawha County.
Affirmed, in part,
reversed, in part,
and remanded.
Footnote: 1
Since the promulgation of the above language in lease
form no. 55, the Public Service Commission has clearly retreated
from the provision concerning the status of the taxicab drivers
as independent contractors and the provision that such drivers
are not covered by the Workers' Compensation Act.
Subsequent amendment of the provision in question of
lease form no. 55 stated:
Lessor and Lessee agree that their
intent is that Lessee shall be an independent
contractor, in that Lessor shall have no
right to control or interfere with the
Lessee's operation of the taxicab during the
term of the lease. As such, Lessee's
operation of the taxicab shall be free from
interference by Lessor, and subject only to
the applicable statutes, regulations, and
rules of the Public Service Commission of
West Virginia, the State of West Virginia,
the County or Municipality in which the
Lessee operates the taxicab, and the United
States. Lessee further agrees that because
of the intent to create this status as an
independent contractor, Lessor will not
withhold any Federal, State, or City income
taxes, or social security taxes or
unemployment taxes with respect to payments
to him, that he will be liable for and will
pay all such taxes and other amounts due from
him. It is understood by the parties
(Lessors-Lessees) that whether the intent to
create the status of independent contractor
is successful is dependent on the terms of
this Agreement and the actual facts and
features of the relationship in a particular
case, as distinguished from the name and form
given to the relationship by the express
words of this Agreement. If the status of
the Lessee is found to be that of an
independent contractor, then the Lessor has
no responsibility to provide coverage under
the Workers' Compensation Act of West
Virginia for the benefit of the Lessee. If
the Lessor is called upon to pay any charges
assumed herein by the Lessee, Lessee will
reimburse the Lessor upon demand. Lessor
shall not be responsible for any injury to
Lessee resulting from the use or operation of
said taxicab, and the Lessee will insure
himself against such injury if he desires
such insurance.
(emphasis added).
Specifically, the brief of the West Virginia Public
Service Commission states that the above amended language
resulted from a compromise between the West Virginia Workers'
Compensation Fund, the West Virginia Taxicab Association and the
Public Service Commission. At the evidentiary hearing conducted
before the Workers' Compensation Fund on December 13, 1990, an
official of the Public Service Commission testified that the PSC
has "no vested interest" in the characterization by the Workers'
Compensation Fund of the relationship between C & H and its
taxicab drivers.Footnote: 2
During the hearing of December 13, 1990, an officer of
C & H testified:
A. The ones that have been there the
longest, most of them, you know, they decide
basically what time frame they want and they
pick it out. When they turn in the thing,
they check one of these periods here and that
decides which one that they're going to take.
Q. Is that selected on a first come,
first-served basis?
A. We do that based upon the customers
[drivers] that we have that we've been doing
business with the longest. Basically they've
been there the longest. They turn their
signed leases in and if there's a conflict as
far as there's just too many leases for one
particular slot, then the fellow that's been
there the longest doing business with us, we
give him a car in that slot.
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