N.Y. Gov. Signs Bill to Assist Livery Cab Drivers

New York Gov. David Paterson has signed into law a bill which establishes clear rules to determine when livery cab drivers in New York City, Westchester, and Nassau County are considered employees or independent contractors of livery bases--cab companies that dispatch livery drivers across the City.

The new law also calls for the creation of a fund to give independent contractor livery drivers and their families workers’ compensation benefits in cases of severe injury or death.

Lack of a clear designation for livery drivers has reportedly jeopardized compensation for injured workers, led to extensive and costly litigation, and even affected compensation for other non-driver employees of livery cab companies.

To protect both the drivers and businesses in one of New York City’s most crucial transportation industries, the legislation (S. 8715 /A. 11759) is significant for two reasons. First, it will establish a clear set of rules to define when drivers are either employees or independent contractors of livery cab bases. Such a designation will be made up front for each livery cab base, so that policies can immediately be put in place for drivers and workers there to claim benefits and compensation.

Second, the bill will create a new fund that, for the independent contractors, establishes full workers’ comp coverage for many serious injuries—death, paralysis, loss of limb and those resulting from a crime. In these cases, drivers will no longer be forced to rely on the no-fault insurance system. The fund will provide greater benefits to the drivers than if they were completely independent contractors, while the bases would pay less than if they were full employees.

Currently, there is no system in place to clarify when livery cab bases should classify their drivers as employees or independent contractors. As a result, an injured driver could reportedly go years without receiving compensation because this lack of designation bounces drivers between the no-fault insurance and workers’ comp systems.

Furthermore, the livery cab bases can be hit with substantial judgments and even felony charges for not adequately providing benefits to their workers. On top of this, other non-driver employees of livery cab companies also see their benefits threatened because insurers often require livery bases to purchase workers' comp insurance for their drivers -- even if they may be independent contractors -- before they will provide coverage for other workers.