Mar 1, 2006 8:57 pm US/Eastern
Private Drivers Not Entitled To Unemployment
HARRISBURG, Pa. (AP) ―
Limousine companies that rely on independent drivers to chauffeur their clients are not the drivers' employers and do not have to pay unemployment taxes for them, Pennsylvania's highest court has ruled.
Upholding Commonwealth Court rulings on legal challenges filed by five limousine companies, the state Supreme Court said the drivers are independent contractors, not employees of the limousine companies.
"It's a good thing for us, and for anybody who's in a subcontractor-type business," said Bill Moser, president of A Touch of Class Limousine Services Inc. in Camp Hill, which was one of the plaintiffs.
The state Labor Department, which had assessed the five companies more than $75,000 in Unemployment
Compensation taxes, penalties and interest, contended that the drivers do not own the vehicles and therefore lack the "proprietary interest" in their businesses necessary to qualify as independent contractors.
In a 6-0 decision dated Tuesday, the justices disagreed. They said the department had invented the criteria for establishing proprietary interests and applied those standards to free-agent drivers employed by the limo companies, even though the expense of obtaining a limousine license from the state Public Utility Commission makes it unlikely that the drivers could supply the vehicles.
"It is clear to us that the majority of individuals who provide driving services to limousine companies would lack the financial resources to own all of the assets of their businesses or bear all of the risks on their own," Justice Sandra Schultz Newman wrote in the majority opinion.
Labor Department spokeswoman Shannon Powers said lawyers there were reviewing the decision, but had no immediate comment.
"Obviously we're not happy" with the ruling, she said.
The court said the drivers are entitled to independent contractor status because they are free to work for competing limousine companies with no adverse impact; their ability to work does not depend on the existence of any one company; and they possess the driver's licenses and necessary experience.
"It's a call-on-demand-type business," said Moser, whose company keeps a list of drivers and contacts them as jobs come in. "Whoever responds first gets the job."
Jim Salinger, co-owner of Harrisburg-based Unique Limousine, said he employs and pays unemployment compensation taxes on 15 people who staff and clean the company's offices in Dauphin, York and Lancaster. The company's arguments that the 80 chauffeurs it hires on a job-by-job basis are in a different category fell on deaf ears in the Labor Department, he said.
"They had a mindset that everybody's employees and that's the end of it," he said.
There are hundreds of limousine companies in the state, although an exact number is difficult to nail down.
The PUC, which regulates the industry in most of the state, lists more than 550 companies, while the Philadelphia Parking Authority lists about 350 in the state's largest city. PUC spokeswoman Cyndi Page said an unknown number of companies are likely on both lists.
(© 2006 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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