Regulations

New York Federal Judge Tosses Out Chauffeur Wage Lawsuit

Posted on September 24, 2014

From Reuters and LCT reports

NEW YORK — A New York federal judge dismissed a lawsuit Sept. 16 brought by chauffeurs for a black car service who claimed they were owed overtime pay, finding that the chauffeurs were ineligible for overtime because they were independent contractors, not employees.


In a case brought under federal and state labor laws, Judge Jesse Furman said the drivers failed to show they were entitled to overtime as employees, partly because the company they worked for had only limited control over them and their schedules.

The chauffeurs could decide for themselves when to provide rides, Furman said in a written opinion filed in the U.S. District Court for the Southern District of New York.

In addition, Furman said in the opinion, the drivers could “take vacations whenever they wished, without notifying defendants in advance, for even months at a time.”

The Fair Labor Standards Act (FLSA), Furman said, defines an employee as “any individual employed by an employer.” The judge added that the law “most unhelpfully, defines 'employer' circularly as 'any person acting directly or indirectly in the interest of an employer in relation to an employee.’”

On whether an individual is an employee under the FLSA, he said, 2nd Circuit courts consider five factors, including the degree of control the employer has over the workers and the permanence or duration of the working relationship.

Eduard Slinin is the CEO of Corporate Transportation Group, one of the largest limousine services in New York, which operates more than 1,300 chauffeured vehicles, mostly Lincoln and Cadillac luxury sedans. He also owns Omni Limousine in Las Vegas, Nev.

“What this case is all about, and all of them, is basically harassment,” Slinin told LCT. “This is hungry trial lawyers playing games. Those types of attorneys go after successful transportation companies and try to figure out a way to extort. Many people don’t have enough money to defend themselves and settle with those guys. In this situation, they were not successful because we challenged them on every aspect. This will help the industry as a whole in the U.S. We are running businesses correctly, which are regulated, and we are doing what we are supposed to.”

Slinin estimated he and his company spent a staggering $1.5 million in legal fees during the last two years to fight this case. Thanks to the decision, he can continue to run his business model based on legal franchisee independent contractors.

The dismissal of the case is a landmark decision in the federal court system regarding independent contractor lawsuits, said Scott Solombrino, the CEO of Dav El/Boston Coach Chauffeured Transportation Network and a longtime board director of the National Limousine Association. Solombrino, who has  been at the forefront of many industry battles regarding labor and wage issues, said the decision could change the way such cases are handled across the country.

“This is a victory for people in the chauffeured car business, to be able to operate under alternative models,” Solombrino told LCT. “I’m happy for Mr. Slinin. He fought this long and hard. It’s about time somebody won this case. I think it will help set some precedent to have a clear understanding on how to operate various vehicle business models.”

Background
In 2012, drivers Mazhar Saleem and Jagjit Singh sued Corporate Transportation Group and related entities, which provide limousine and other vehicle services for corporate clients in New York, New Jersey and Connecticut, said the opinion.

The two chauffeurs accused the company of misclassifying them as independent contractors and sought unpaid wages and damages under FLSA and New York State Labor Law (NYLL) on behalf of a class of drivers, according to the complaint.

In two rulings last year, Furman conditionally certified a collective action under the FLSA, but denied the plaintiffs' motion for class certification of their NYLL claims.

Both parties subsequently moved for summary judgment. The plaintiffs argued that the company exercised “pervasive control” over the drivers, for example by monitoring their daily activities and their performance, according to court papers.

In Tuesday's ruling, Furman granted Corporate Transportation Group's motion and dismissed the lawsuit, finding the drivers were not employees under the FLSA or NYLL, which consider similar factors in determining worker status.

Furman said the drivers could terminate their agreements with the company at will, they could work for competitors, and they were never obligated to accept a particular ride request.

Adam Klein, a partner for Outten & Golden who represented the plaintiffs, did not immediately respond to requests for comment.

"Our client is very pleased with the result of Judge Furman's well-reasoned decision," said Evan Spelfogel of Epstein Becker & Green, who represented Corporate Transportation Group.

The case is Mazhar Saleem et al v. Corporate Transportation Group Ltd et al, U.S. District Court, Southern District of New York, No. 12-cv-8450.

For the plaintiffs: Adam Klein, Justin Swartz and Lewis Steel of Outten & Golden

For the defendants: Evan Spelfogel of Epstein Becker & Green

Related Topics: chauffeur behavior, DOL issues. Department of Labor, employee vs independent contractor, employee wages, independent contractor issues, labor laws, legal issues, New York operators, Scott Solombrino, wage lawsuits

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