Question

In: Operations Management

Taxi drivers for the Yellow Cab Company sign independent contractor agreements with the company, from whom...

Taxi drivers for the Yellow Cab Company sign independent contractor agreements with the company, from whom they lease cabs for a daily fee. With a few exceptions, drivers are free to drive any routes and to work as many hours as they chose. Drivers’ payment consists of the fares taken in minus the leasing fee and other expenses. Rates for cab rides are set by the company. Drivers are required to use meters, to meet certain appearance requirements, to have their radios on and respond to a dispatcher, to avoid profanity, and to adhere to a variety of other rules of conduct. Drivers who violate rules are subject to suspension. Drivers are required to obtain oil changes and maintenance work from the cab company and to buy gas from it. The cab company provides drivers with insurance and business cards. When one of the Yellow Cab Company’s drivers was murdered on the job, his estate sought to obtain workers’ compensation death benefits. The cab company claimed that the estate had no entitlement to those benefits because the deceased was an independent contractor. What should the court decide? (Nelson v. Yellow Cab Co., 564 S.E.2d 110 (S.C. 2002)

1. What legal tests* can be applied? What factors make up those legal tests*?

2. What are the key factors the court will probably consider?

3. What else would you like to know in order to draw a conclusion?

4. Based on these facts, make a determination, what is your conclusion? Independent Contractor or Employee

Solutions

Expert Solution

Answer 1=In the given case, the IRS rules and doctrine of common law will be used by the court. The court will judge the manner and the means by which the different types of services are facilitated by the taxi drivers to recognize them either the employee or the independent contractor.

Answer 2= The court will mainly look in the following factors=

Whether the contractor has control over the operations of the drivers

Whether the contractor provided the taxi driver the equipment and other tools and cars for facilitating the service

The power of the contractor to take disciplinary action and to terminate the service providers

Answer 3=- I will also check the mode of payment to the taxi drivers and the different types of other employment-related benefits are provided to the taxi drivers or not

Answer 4= If we look at the given case taxi drivers will be employees rather than the independent contractor as the taxi drivers conduct, dressing, the charge taken by them from the passengers, the working hours are controlled by the Yellow Cabs, they are also required to take oil changes and maintenance work from the cab company and to buy gas.


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