101 A.D.2d 730 | N.Y. App. Div. | 1984
Order of Supreme Court, New York County (Martin Evans, J.), entered July 26, 1983, granting defendants-respondents’ motion for summary judgment and dismissing the complaint, reversed, on the law, and the motion for summary judgment is denied, without costs. U At issue is whether the drivers of respondents’ taxicabs are employees or merely independent contractors who lease taxicabs. If they are independent contractors and not cab company employees, respondents contend that they are not bound to provide workers’ compensation insurance and thus do not owe the State Insurance Fund premiums for such coverage. 11 The record shows that on October 1, 1976, respondents applied to the State Insurance Fund for workers’ compensation insurance and employees liability insurance, stating that they were engaged in a public livery business. On that application, respondents reported that along with clerical and executive employees, they would be employing 21 persons under the classification of taxicab or public livery operators, with projected annual salaries totaling $157,000. Workers’ compensation policy number 504-873-1 was issued and continued in effect until December 4, 1981 when it was canceled for nonpayment of premiums amounting to $23,733.12, the amount sued for herein. 11 Respondents claim that the drivers operating vehicles for them enter into daily lease agreements for a predetermined number of hours and, thus, the drivers are lessees or independent contractors, not intended to be covered by workers’ compensation coverage. The lease document asserts that the driver and owner are lessee/lessor and that nothing in the agreement shall be construed to create the relationship of employee/employer. The drivers merely pay a rental fee per mile, and may opt to pay an additional fee for the use of a radio, in which event the drivers are free to accept or reject radio calls. A liability insurance premium is apportioned into the fee and the drivers are responsible for gasoline and the payment of their own self-employment taxes. No “salary” is paid and the drivers’ fares constitute their earnings, from which must be subtracted the rental fees and all expenses. 11 But the keystone to respondents’ argument is a 1977 ruling of the Internal Revenue Service, issued in response to respondents’ request regarding their status for Federal employment tax purposes regarding the individual drivers. That opinion states that under the circumstances drivers should not be considered employees of the corporation during performance of driving services for the purpose of FIG A, FUTA and the collection of income tax by an employer. Respondents have failed to show how that Internal Revenue Service opinion is binding on the State Insurance Fund or this court, however. Additionally, we note that in Board v HearstPubs. (322