No Way to Prepay! Yellow Cab's New Policy, Just Another Scam

2008-07-24T16:03:00.000-07:00

The prepayments that Yellow Cab is demanding from its drivers is the most current cab company scam aimed at rounding up large amounts of money from its drivers and putting it into its pockets.

Last month, Yellow posted flyers on its walls telling drivers that they must make a one-time prepayment of one month's worth of their shifts, plus their daily gate fees, as an "integral part of maintaining your independent contractor status".

They are using an Information Sheet put out by the California EDD (Employment Development Department), which says that if a taxi driver were to "prepay to lease a taxicab for a period of at least 28 days," then the EDD would consider that as one indication that the driver could be an independent contractor.

The EDD uses many of these kinds of guidelines when it needs to determine whether a worker qualifies as an employee or is an independent contractor, for reasons of granting unemployment or workers' comp benefits to its applicants.

Cab companies need their workers to be listed as 'independent contractors' to reduce the number of their workers that can qualify for unemployment or workers comp benefits, thus reduce or eliminate the costs that they must pay for those insurance premiums. Also, by listing their workers as independent contractors, they avoid tax liabilities.

However, Yellow is forcing its drivers into these prepayment agreements instead of negotiating with them, and in doing so, it in effect, kills its own argument that the prepayments uphold the workers' independent contractor status.

The EDD determines employee vs. independent contractor status based upon the amount of control a company demonstrates over its workers.

Yellow, by forcing a one-sided company policy upon the driver, in which the driver has no say, is encouraging something that the EDD does not consider to be characteristic of an independent contractor.

According to an EDD auditor with whom I spoke, a company that's forcing its policies on its workers could cause the EDD to believe that the worker could in fact be an employee, despite their company's classification, and may have be misclassified by their company as an independent contractor.

In addition, should Yellow succeed in collecting prepayment money from its drivers, which could amount to well over $2 million, we are told that the money will be placed and kept in a separate account, and returned to us when we leave.

I assume that with every new driver forced to pay these prepayments as a condition of hire, the amount held in the account would increase over years' time. The company could then profit from its investments, and gain upon its interest.

Yellow has neglected to explain to its drivers either verbally or in writing, how the money that the drivers submit would be used. It has neglected to express verbally or in writing anything that would ensure that drivers benefit from money held in the account. For example, why couldn't interest from the drivers deposits, or investments made from their deposits, go towards a healthcare plan?

I assume that the company intends to keep profits gained from the deposits, whether from interest or investments, and give nothing to the drivers in return. I and other like minded drivers see this, and refuse to pay what the company demands.

United Taxicab Workers

No Way to Prepay! Yellow Cab's New Policy, Just Another Scam