WORKERS COMPENSATION FOR DRIVERS - CHANGES IN THE LAWS

NOVEMBER 2008 INDEX

WORKERS COMPENSATION FOR DRIVERS - CHANGES IN THE LAWS

by Alan Plafker, PRESIDENT & CEO Member Brokerage Service LLC

A Melrose Credit Union Service Organization

Governor Paterson signed two new laws this year relating to Workers Compensation type benefits for Black Car and Livery Drivers. These laws are intended to clarify definitions and provide benefits to independent dr iver and determine when claims are to be paid by the no-fault (PIP) coverage in the Auto Policy. There is an existing fund for Black Car drivers which is amended by the new law. The new law for Livery Drivers creates a new Livery Drivers Benefit Fund.

First, here is information on the law enacted for Black Car Drivers:

PURPOSE: To clarify existing law that workers' compensation benefits - secured by the New York Black Car Operators' Injury Compensation Fund, Inc. (the "Fund") pursuant to Executive Law Article 6-F - is designed to cover only black car operators whose injuries arose out of and in the course of providing covered services while on a dispatch from a central dispatch facility.

SUMMARY OF PROVISIONS:

The bill would amend the executive law and clarify that:

the definition of covered services means a black car operator while on a dispatch from a central dispatch facility.
The bill also defines the term "dispatch" to mean a black car operator who is in the course of picking up, transporting or discharging a passenger or package or other items at the express direction of a central dispatch facility or such other meaning as established by regulation proposed by the Fund and adopted by the Dept. of State.
Sections 3 to 6 would amend and clarify that the Fund is deemed to be the "employer" of a black car operator and such operator is deemed to be an "employee" and in the "employment" of the Fund only while such operator is providing covered services.
Additionally, a black car operator providing services for a central dispatch facility refers to covered services.

In other words, this legislation narrows the definition that a driver is eligible for benefits only when in the course of picking up, transporting or discharging a passenger or package or other items at the express direction of a central dispatch facility. Otherwise, Auto (PIP) coverage would provide benefits for injury to a driver.

Here is information on the new law for Livery Drivers:

PURPOSE:

This bill establishes clear rules for determining when livery drivers in New York City, Westchester and Nassau County are employees or independent contractors of livery bases, and creates a fund to give independent contractor livery drivers workers' compensation benefits in certain circumstances where no fault automobile insurance does not provide any or sufficient coverage.

SUMMARY OF PROVISIONS:

Section 1 of the bill amends the Executive Law to add a new Article 6-G, which creates the Independent Livery Driver Benefit Fund.

All independent livery bases (as defined in the workers' compensation law), make annual payments into the fund to purchase workers' compensation benefits for independent livery drivers - those who do not have an employer that can pay for such benefits - to cover deaths, injuries resulting from crimes and certain catastrophic injuries arising from their service as livery drvers. This section creates a Board of Directors to manage the fund, and establishes strict penalties for violations.

Section 2 of the bill amends the Workers' Compensation Law (WCL) to create anew § 18-c, which sets forth the criteria for designating a livery base as "independent." The statute defines all livery bases not designated as "independent" as employers under the WCL.

Section 13 of the bill section 1 of the Act providing for creation of the Independent Livery Driver Benefit Fund will become effective immediately except for two provisions thereof, the provision creating WCL §18-c(5) will become effective January 1, 2010 when the Board will be appointed.

The remainder of the bill will become effective January 1, 2009. (2010 is when the law will be enforced. The 2009 date is when the Board is appointed & begins the process to set up the new fund.)

STATEMENT IN SUPPORT:

Livery drivers who transport passengers pursuant to a dispatch from a base and who operate on a cash basis are a crucial link in the transportation network of many urban areas. The problem of whether and how to provide them with workers' compensation benefits has bedeviled the workers' compensation system for many years.

At present:

(1) livery bases that dispatch livery drivers cannot determine before a driver's injury whether they must purchase workers' compensation insurance for such driver;

(2) many bases fail to purchase such insurance, and livery drivers whose workers' compensation claims are upheld must be paid from the Fund for Uninsured Employers;

(3) claimants must spend many months litigating between the workers' compensation and no-fault systems before they receive benefits; and

(4) those drivers who are determined to be independent contractors are uncovered altogether for certain injuries such as those that arise out of crimes.

(5) In addition, independent livery bases must pay into a fund that will provide a limited workers' compensation benefit to their drivers to which such drivers would not be entitled as independent contractors. In particular, such benefits will be provided in cases of death, injury from a crime involving a police report, the amputation or loss of an arm, leg, hand, foot, multiple fingers, index finger, multiple toes, ear, or nose; paraplegia or quadriplegia; or total and permanent blindness or deafness. The drivers would receive greater benefits then they would as independent contractors while the bases would pay less than they would if deemed employers.

In summary, the bill reflects a tradeoff that will address many of the problems that have beset the workers' compensation system in the livery industry. Bases will receive certainty as to their obligations under the workers' compensation law. In exchange, they must pay into a fund to insure that severely injured drivers have adequate benefits. Those that are employers must purchase workers' compensation. These tradeoffs will reduce system costs and insure adequate benefits for drivers.

This new law does not really provide workers compensation insurance benefits to drivers. It provides a limited schedule of benefits within a narrow definition of coverage. It shifts more of the claims to the auto policy, and may cause auto premiums to increase. In some cases, injuries suffered by drivers such as a back car injury from lifting a passenger’s luggage would not be covered by either the new injury fund or the auto policy.

We have gaps of coverage created by the new law that might otherwise be covered under the traditional workers compensation coverage We can only hope that the good intentions of the law will be worked out since the premise was to provide benefits to livery drivers that were not covered by workers compensation. My concern is that we don’t want those good intentions turning into higher auto premiums, gaps in coverage, increased cost to drivers, and higher costs to the public to pay for the cost of the injury fund. I am sure many of these concerns will be addressed as this develops further.

Alan Plafker is President of Member Brokerage Service LLC, a Melrose Credit Union Service Organization. He is a licensed Insurance Broker and serves on the Board of Directors the PIANY (Professional Insurance Agents Association of NY) and on the Board of CIBGNY (Council of Insurance Brokers of Greater NY). His Agency insures thousands of polices for TLC Insurance as well as many policies for all types of insurance. You can reach him in his Briarwood, Queens office at (718) 523-1300 ext. 1082.

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