When can giving or taking a ride go from transportation to risky trip

In the recent unpublished Appellate decision of Babekr v. XYZ Two Way Radio, N.J. Super. (App. Div. 2015), the NJ Appellate court affirmed that a chauffeur (Babekr) was an independent contractor rather than an employee. This ruling may have wide-ranging implications and may impact more than just the chauffer’s ability to collect workers’ compensation benefits.  In sum, this decision likely leaves the passengers at the mercy of the chauffer’s potentially inadequate insurance coverage and allows the larger organization (XYZ), which receives the largest benefit of the ride, to pass the insurance costs to the drivers.  With the advent and the increasing use of ride-sharing services,  both the drivers, whose personal auto insurance likely does not cover them for commercial use of their vehicles, and the passengers must take care and maintain vigilance in ensuring that they are properly protected from undue medical and financial risk.

While issuing the above decision, the court admitted that transporting passengers was an integral part of XYZ’s limousine business but determined that Babekr’s individual involvement was not of particular import.  In addition, the court found that XYZ exercised very little control over its drivers; they could work which ever hours they so choose, were free to work for whomever they wanted, and could return to work for XYZ by merely turning their on-board computer system on.  Furthermore, the petitioner was able to set his own hours, provided his own car and could not be terminated from his job.  Perhaps, most importantly, the court emphasized that the drivers were part owners of XYZ.  Accordingly, it was decided that Babekr’s relationship with XYZ did not meet the Compensation Act’s definition of “employee”, which is “synonymous with servant”.  Since only employees receive the benefits of the Compensation Act and independent contractors are not subject to the Act, Babekr’s compensation claim was deemed to have been properly dismissed.

Specifically, XYZ Limousine Services, was deemed to be a company made up of its 430 individual drivers, each of whom owned shares in the company, and 50 administrative personnel. The drivers of XYZ elect “board members,” who make the key decisions concerning the company’s operations. Passengers retain accounts with XYZ and pay their fares directly to their accounts.  XYZ then forwards the drivers a percentage of the fares from the clients’ accounts. XYZ does not deduct taxes and issues each driver a 1099 form. The only restrictions XYZ placed on the drivers were that they have to dress professionally and have a certain type of car.

Questions left unanswered by the Babekr case are as follows:

  • What if all or nearly all of Babekr’s income came from transporting XYZ’s passengers?
  • What type of insurance, if any, did XYZ provide to either its drivers or their passengers?
  • What would happen if the XYZ’s passenger was injured during the trip and how, if at all, would their injuries be compensated.
  • Would the court’s decision have been different if XYZ’s drivers’ were not shareholders of XYZ?

Historically, the reported cases universally hold that if Babekr was driving for a regulated livery business, he would have been covered by the NJ Workers’ Compensation Act. The issue here would seem to be an individual would have much more certainty of being properly protected if they decide to drive for or be a passenger of a regulated livery business. To do business otherwise may save a few cents in the short term but could lead to long-term medical care and other issues, which could lead to significant financial risk.

If you feel you have questions about this topic or if you may have been impacted by a situation like this; please feel free to contact the attorneys at Young & Perez through the many convenient methods provided for on this website or by calling us at 908.823.1212. At Young & Perez confidentiality, integrity, and professionalism have always been the cornerstone of our business and professional relationships.

Carol L. Perez, Lecturer and Helpline Volunteer

Carol L. Perez, Esq. presently serves as a volunteer attorney for the Hunterdon Helpline, a non-profit organization. Each month Ms. Perez makes herself available to the residents of Hunterdon County who are in need of legal services via the “Ask the Attorney Night” program. Ms. Perez has been a frequent guest over the past years on many local radio and TV programs. In November 2014, Ms. Perez presented to Hunterdon County Lawyers a seminar on the topic of Workers Compensation law in the State of New Jersey.

Robert J. Young named 2015 Super Lawyer

Robert J. Young has been recognized for the eleventh consecutive year as a SuperLawyer in the New Jersey Monthly. In the May 2005 through 2015 issues, Mr. Young has been listed amount the top lawyers in New Jersey and selected as an elite workers’ compensation attorney. From the region encompassing Hunterdon, Somerset and Warren Counties he was the only attorney with this expertise chosen to receive this distinction.

Press Release

THE NATIONAL ASSOCIATION OF DISTINGUISHED COUNSEL

 

PRESS RELEASE

Robert J. Young, of Young & Perez, has been selected to the 2015 list as a member of the Nation’s Top One Percent by the National Association of Distinguished Counsel.  NADC is an organization dedicated to promoting the highest standards of legal excellence.  Its mission is to objectively recognize the attorneys who elevate the standards of the Bar and provide a benchmark for other lawyers to emulate.

Members are thoroughly vetted by a research team, selected by a blue ribbon panel of attorneys with podium status from independently neutral organizations, and approved by a judicial review board as exhibiting virtue in the practice of law.  Due to the incredible selectivity of the appointment process, only the top one percent of attorneys in the United States are awarded membership in NADC.  This elite class of advocates consists of the finest leaders of the legal profession from across the nation.

Robert J. Young named 2014 Super Lawyer

Robert J. Young has been recognized for the tenth consecutive year as a SuperLawyer in the New Jersey Monthly. In the May 2005 through 2014 issues, Mr. Young has been listed amount the top lawyers in New Jersey and selected as an elite workers’ compensation attorney. From the region encompassing Hunterdon, Somerset and Warren Counties he was the only attorney with this expertise chosen to receive this distinction.

As one of the leading litigation experts, Mr. Young is spreading his knowledge with the insurance industry and people with interest as he lectures in many educational programs throughout New Jersey.