Two cabdrivers have filed a lawsuit against the City of Boston and private taxi fleet operators, accusing them of wrongly classifying drivers as independent contractors instead of employees, failing to pay minimum wages and overtime, and forcing them to cover expenses associated with their jobs.
The plaintiffs, who filed the lawsuit Tuesday in Suffolk Superior Court, are seeking class-action status on behalf of hundreds of shift drivers who make up the vast majority of licensed cabdrivers in Boston.
They say drivers should be considered employees because they are an essential part of the businesses run by taxi fleets and radio associations, and are tightly regulated by those groups and the city.
If their action is successful, it could dramatically change how taxidrivers are compensated and shift much of the cost to the fleet operators, according to industry observers. It is unclear how that might affect fares for passengers.
A recent Massachusetts Supreme Judicial Court decision led to the cabdrivers’ suit, according to Shannon Liss-Riordan, a lawyer representing them. Last summer, the court ruled that it is illegal for an employer to charge a fee to a worker as a condition of employment.
The decision was part of a case involving Coverall cleaning franchisees who had been misclassified as independent contractors.
In its decision, the court ruled that the franchisees could collect damages for the fees they paid Coverall to operate the cleaning services.
Liss-Riordan said the ruling is relevant to Boston taxidrivers because they are required to pay up to $150 in shift fees to drive cabs, along with gas, tolls, insurance, and other costs. According to court documents filed Tuesday, it is not uncommon for them to lose money after working a shift.
“This a feudal business. The taxi owners and the city make all the money, and the taxidrivers are slaving away and make a pittance,’’ said Pierre Duchemin, one of the cabdrivers who filed the lawsuit.
Duchemin said he works more than 80 hours a week and often comes back with just $20 or $30 after a 12-hour shift. He said he is behind on his rent and has moved three times in the past several years because he cannot afford his living expenses.
“We don’t have any rights because of the system that has been created by the taxi companies and the City of Boston with their faulty rules,’’ Duchemin said. “We should be classified as employees and get more rights to repair this injustice.’’
John M. Guilfoil, a spokesman for Mayor Thomas M. Menino, said, “The city is unaware of the lawsuit, has not been served, and is unable to comment on it.’’
Boston Cab Dispatch, a taxi fleet operator, and Independent Taxi Operators Association, a radio association that controls dispatching of cabs assigned to it, did not return messages seeking comment.
Andrew Hebert, a manager at USA Taxi in Dorchester, which is affiliated with the operators association, declined to discuss specifics of the lawsuit, except to say, “The industry will certainly be watching the suit to see how it affects the price of medallions. The price has been rising steadily for the last 10 years and is currently selling for about $540,000 - up about $100,000 from the previous year.’’
Boston has a limited number of taxicab licenses, known as medallions, issued through the Boston Police Department’s Hackney Carriage unit. Many medallions are owned by investors who lease them to drivers at high rates.
In the lawsuit, the city is accused of “aiding and abetting the misclassification of taxidrivers and other wage law violations.’’
Cabdrivers in Boston, according to court papers, work under the joint control of fleet operators and the hackney unit, which provides a shift lease agreement that fleet owners and managers are required to use with taxidrivers. The lawsuit says that through the agreement, the city can control shift fees, late fees, and other financial terms related to drivers’ jobs, and “expressly provides that fleet owners or managers may classify shift drivers as independent contractors rather than employees.’’
Taxidrivers in many cities, including Boston, at one time were classified as employees by cab companies. But operators began shifting to a contractor model - Boston switched during the 1970s - which can reduce payroll costs for items such as workers’ compensation by almost one-third, according to Catherine Ruckelhaus, legal codirector of the National Employment Law Project in New York.
The Massachusetts Independent Contractor Law, enacted in 1990, was tightened in 2004 primarily to address the perceived abuse of workers treated as independent contractors in the construction industry, said Robert M. Shea, an employment lawyer based in Waltham.
Since then, workers in other industries have successfully fought their classification as independent contractors, rather than being hired as regular employees who would be entitled to benefits such as unemployment insurance, overtime, and workers’ compensation.
“I want to make a fair wage, and they just keep collecting and collecting and nothing is left in our pocket,’’ said Bernard Sebago, the second Boston cabdriver who filed the suit Tuesday.
Fines for noncompliance by companies are steep, ranging from $10,000 to $25,000 for first offenders, according to Shea. The bigger risks are private lawsuits, where plaintiffs can recover triple damages and attorney’s fees.
“The greatest concern for businesses using large numbers of independent contractors is a private lawsuit brought as a class action,’’ Shea said. “Such a lawsuit can put a company out of business.’’