Federal court orders Bay Area taxi, limo companies’ owner to pay misclassified workers $175K in back wages, damages

SAN FRANCISCO – A federal judge has ordered the owner of a Bay Area taxi and limousine service to pay a collective $175,000 in back wages and damages to dozens of drivers who the company misclassified as independent contractors and failed to pay minimum wage and overtime pay as federal law requires. 

The order entered in U.S. District Court for the Northern District of California follows years of denial by Sayed Abbas – owner of the Mountain View-based Stanford Yellow Taxi Cab, Inc. and AAA Legacy Limousine, Inc. – that his drivers were employees, not independent contractors.

The action culminates a long-contested dispute with the U.S. Department of Labor. In addition to accepting the ruling that his drivers are, in fact, employees, Abbas also admitted that he and his companies violated the minimum wage, overtime, and recordkeeping provisions of the Fair Labor Standards Act.

In May 2015, Judge Edward J. Davila found Abbas and his companies misclassified its drivers as independent contractors. He also supported the contention by the department’s Wage and Hour Division that the companies’ management retaliated against drivers and interfered with the division’s investigation.

“The court’s decision confirms what we’ve maintained all along: that Stanford Yellow Taxi Cab and AAA Legacy Limousine drivers are indeed employees who should be paid and afforded all of the benefits federal law requires,” said Susana Blanco, director of the department’s Wage and Hour Division office in San Francisco. “This case shows again that we will go to great lengths and do what’s needed to see that workers receive a fair day’s pay for a fair day’s work.”

“We see far too many employers misclassifying employees as independent contractors to avoid their obligation to pay the minimum wage and comply with worker protection and tax laws. Misclassification hurts workers and their families, cheats taxpayers and industry competitors,” said Janet Herold, solicitor for the department’s Western Region. “Employers like Sayed Abbas take advantage of vulnerable workers by making them sign sham independent contractor agreements that mask actual working conditions. The court’s order underscores that an employer cannot demand economic dependence from workers while also denying those workers their required wages under the Fair Labor Standards Act.”

Some employers intentionally misclassify their workers as independent contractors to reduce labor expenses.  Once an employer ceases to consider a worker an employee, they wrongfully reduce their payroll expenses by neglecting to make legally-required contributions to unemployment insurance and workers’ compensation funds. By misclassifying their workers, employers also avoid remitting payroll taxes, resulting in huge losses to state treasuries, and the federal Social Security and Medicare programs.

Stanford Yellow Taxicab and AAA Legacy Limousine required drivers to work six days per week for 12-hour shifts and only paid the drivers a percentage of their fares, taking no measures to ensure the drivers received at least the minimum wage for all hours worked. The companies also did not allow drivers to change their schedules or operate independently by reaching out directly to passengers. Drivers also had to abide by a dress code.

Stanford Yellow Taxicab Inc. and AAA Limousine Inc. provide transportation services in Silicon Valley.

The FLSA requires that covered, nonexempt workers be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus one and one-half times their regular wages for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records.  Employers are prohibited from retaliating against workers who exercise their rights under the law.

For more information about federal wage laws administered by the division, call the agency’s toll-free helpline at 866-4US-WAGE (487-9243). Wage and Hour’s services are free and confidential. Information also is available at http://www.dol.gov/whd/.