WORKER’S COMPENSATION INSURANCE IN THE TAXI/LIVERY INDUSTRY

SEPTEMBER 2014 INDEX

WORKER’S COMPENSATION INSURANCE IN THE TAXI/LIVERY INDUSTRY–UPDATE

By Alan Plafker, President & CEO
Member Brokerage Service LLC
A Melrose Credit Union Service Organization

One year ago, I wrote an article about the Workers Compensation and Disability Benefits Law as it applies to the TLC Licensees. At that time, the “Boro Taxis” were just beginning to operate and a lot has evolved since then including many types of vehicles trying to operate within the NYC marketplace.

Beginning this month, the TLC has informed us:

They are beginning to enforce regulations requiring DBL (Disability Benefits Law) coverage in addition to WC (Workers Compensation) for the Taxi Industry.
They are beginning to enforce regulations requiring WC coverage for Boro Taxis that have drivers other than an owner driver.

I have included the following excerpts from last year to better explain regulations from the Workers Compensation Board and the TLC. Please contact me if there are any questions.

Over the past 20 years, the evolution of the Taxi / Livery industry has caused challenges for owners, bases, and drivers to be in compliance with the NY State Workers Compensation laws.

Simply: The law says that all employers are required to cover their employees for Workers Compensation (WC) and Disability Benefits Law Coverage (DBL).

WC - covers injuries on the job for medical expense and loss of earnings.

DBL - covers injuries off the job for loss of earnings to a maximum of 6 months.

Here is the complexity

In our taxi /livery industry, drivers do not simply get a paycheck like other employment. There are many rules, interpretations and guidelines to determine when workers are considered employees or independent contractors and to determine who the employer is.

The NYC TLC has definitions for various types of “For Hire” vehicles. Now, another type has been added to the list to make things more complicated and has caused changes to the WC requirements.

The “Outer Boro Street Hail” Taxi, SHL, is a new license that was recently approved despite much controversy. It presents more challenges to WC compliance because licensees must be affiliated with a dispatch base and drivers can now also do non-dispatched street hails. This Dual use complicates the definition to determine if, how, and when a driver is subject to coverage under workers compensation, and who is to provide it.

In general, a Medallion Taxi driver that is an owner and the only driver, without any other drivers, can file an exemption and does not need WC or DBL coverage. Recently, the TLC and Workers Compensation Board (WCB) have agreed that any non-exempt owner (one that has drivers) must also cover DBL for drivers in addition to WC. This has not been the understanding or practice until now, but they have informed us it will be required and enforced.

HERE IS A RECAP OF HOW WC RELATES TO EACH TYPE OF LICENSE

Yellow Taxi Medallion - Owner/Drivers are exempt, but all other drivers must be covered by the owner for WC and now also DBL.

Black Car & Luxury Limousine Base License - Drivers are independent and affiliated with a licensed base. Those drivers may be covered for WC through the New York Black Car Fund. The Fund was created by statute (Chapter 49 of the laws of 1999) to provide workers’ compensation coverage for Black Car operators in New York State, and signed into law by Governor George Pataki in May of 1999. If the base does not qualify for membership in the fund, because more than 50% of vehicles are owned by the base or for any other reason, then they must have a WC policy.

Livery Base License – Drivers are independent and affiliated with a licensed base. Those drivers may be covered for WC through the New York Independent Livery Drivers Benefit Fund (NYILDBF). This fund was created by Statute (Chapter 392 of the Laws of 2008). On July 26, 2008, NY Governor David Paterson signed legislation that created the Livery Drivers Benefit Fund, providing compliance with The WC laws.

That statute allowed livery bases in New York City, Westchester and Nassau Counties, to qualify as “independent” bases if they met certain criteria typically used by the courts to determine independent contractor status. Specifically, the statute stated that independent bases would pay into the Fund which would purchase special coverage that would provide workers’ compensation benefits for the most serious injuries, including those resulting from crimes and deaths. The Fund provides Workers' Compensation benefits for serious injuries and crimes committed against drivers dispatched by qualifying independent livery bases. The Livery Fund Law has helped solve a workers’ compensation problems that have spanned three decades.

If the base does not qualify for membership in the fund, if more than 50% of vehicles are owned by the base or for any other reason, then they must have a WC policy.

Now, since TLC has a new License – the “Green” Outer-Boro Taxi, there are exposures and guidelines issued by the NYS Workers Compensation Board (WCB). These Taxis have a “dual use” - they can do street pickups independently but must be affiliated with a livery base that also does dispatches. These vehicles at times are covered by the NYILDBF when dispatched or, when a driver is providing street pick up, the driver may be covered by the owner’s WC. If the driver is an owner driver then the driver may be exempt. This can cause problems in the event of a claim.

Overview

On February 17, 2012, Governor Cuomo signed into law Chapter 9 of the Laws of 2012 which amended Chapter 602 of the Laws of 2011 establishing a new form of taxi service in New York City. The NYC Taxi & Limousine Commission implemented the new legislation which expanded street-hail taxi service outside of the Manhattan Central Business District and the airports. The Boro Taxis provide legal taxi service to the seven million New Yorkers living in Northern Manhattan and the four other Boroughs.

New York City made a total of 18,000 street-hail livery licenses available with an initial set of 6,000 being sold for $1500 in June 2013. The Boro Taxi associated with each license has a unique color (green) and markings, as well as roof lights, and taxi meters.

The legislation also requires that each Boro Taxi be affiliated with a base that is licensed to affiliate such taxis.

The following describes who is responsible for providing Workers' Compensation and Disability Benefits coverage, under existing law, for drivers operating under these new licenses.

Application

Under the current Workers' Compensation Law and Article 6-G of the Executive Law, livery drivers of bases who are members of the Independent Livery Driver Benefit Fund (ILBDF) are deemed employees of the ILBDF if the accident occurs during the performance of a dispatched call. If an independent livery base is not in the ILDBF, the drivers are deemed employees of the base.

The employer for all other livery drivers is the lessor of the vehicle(s) unless the owner-operator also drives the vehicle 40 or more hours per week. This owner-operator exemption only applies to sole proprietors; other legal entities such as corporations and partnerships are not eligible for the exemption. Owner-operators who do not lease their vehicle to other drivers are not required to cover themselves.

Bases are allowed to provide Workers' Compensation protection for their affiliated drivers through membership in the ILDBF. This fund provides coverage for limited catastrophic injuries and injuries due to a crime, but only while the driver is on a dispatched call from a base. All other injuries are eligible for no-fault benefits through an automobile liability policy.

Due to these limitations, drivers performing street-hail services in Boro Taxis cannot be covered for Workers' Compensation benefits through the ILDBF. If the base that the driver affiliates with is a member of the ILDBF, the ILDBF will cover the driver only while he is on a dispatched call from that base, but not while performing street-hail services. Additional compensation coverage is required because of this gap in coverage.

The lessors of yellow medallion cabs are universally required to provide full Workers' Compensation and Disability Benefits coverage for their drivers unless they qualify for the owner-operator 40 hour exemption. As the new Boro Taxis will be providing identical street-hail services as the yellow medallion cabs, the employment relationship between the owner of a street-hail livery license to operate a Boro Taxi and the driver is the same as it is for the yellow cabs.

As such, the owner of any street-hail livery license to operate a Boro Taxi must provide full Workers' Compensation coverage for any driver who is hired or who leases the vehicle. Accordingly, proof of that coverage must be provided to the Taxi & Limousine Commission in order to obtain the street-hail livery license.

An owner-operator who drives his/her vehicle 40 or more hours per week and who is seeking an exemption to the Workers' Compensation requirements must complete the Board's exemption certificate (form CE-200), available on its home page, and submit it to the Taxi and Limousine Commission.

The following summarizes Workers' Compensation coverage requirements related to Boro Taxis:

Anyone holding a single street-hail livery license must obtain a full Workers' Compensation policy unless the vehicle is owner-operated and driven by the owner more than 40 hours per week or is not leased to other drivers.
Anyone holding two or more handicap-accessible street-hail livery licenses must obtain a full Worker's Compensation policy.
A Boro Taxi base that also owns a street-hail livery license must obtain a full Worker's Compensation policy to cover Boro Taxi drivers for injuries not covered by the ILDBF.

Bases that will continue to operate vehicles solely on a dispatch basis and not as Boro Taxis are reminded that they must join the ILDBF or obtain a full Workers' Compensation policy. If the base does belong to the ILDBF and also has employees working in the base, such as mechanics and dispatchers, a full Worker's Compensation policy is required to cover these non-driver employees.

We are beginning to see how this new license and other changes will affect the industry from all aspects including:

Insurance,
Regulations,
Enforcement,

as well as the effects it will have on the values and operations of other licenses like Medallion and Black Car.

I welcome any inquiries on this topic.

Your Professional Insurance Agent …
We want you to know about the insurance you’re buying.

Alan Plafker

President of Member Brokerage Service LLC, A Melrose Credit Union Service Organization
Licensed Insurance Broker
President and Member of the Board of Directors, PIANY, Professional Insurance Agents Association of New York
Active Member of CIBGNY, Council of Insurance Brokers of Greater New York
Treasurer, New York Independent Livery Driver Benefit Fund Board of Directors

His agency insures thousands of policies for Taxi Limousine Commission insurance as well as many policies for all types of personal and commercial insurance. He can be reached in his Briarwood, Queens office at 718-523-1300 X1082, or www.MemberBrokerage.com.