Filed Under:Markets, Workers Compensation

California taxi company reaches settlement for failure to carry workers’ compensation insurance

Many taxicab companies try to claim that their drivers are independent contractors to keep costs, including workers' compensation insurance, at a minimum. (Photo: Thinkstock)
Many taxicab companies try to claim that their drivers are independent contractors to keep costs, including workers' compensation insurance, at a minimum. (Photo: Thinkstock)

California Labor Commissioner Julie A. Su announced Dec. 29 that Santa Rosa taxi company A-C Transportation Services, Inc., has agreed to settle its $522,300 citation for refusing to provide its 30 drivers with workers’ compensation insurance coverage and for misclassifying them as independent contractors.

The owners, Kevin and Jennifer Kroh, who also do business as Healdsburg Cab Company, agreed to pay a fine of $200,000 in installments, with their final payment in June 2021. If they default on the payments the agreement is void and the full $522,300 judgment will be due. As part of the settlement, the company will cease all operations as of Dec. 31, 2016.

Related: Couple arrested on Workers’ Comp insurance premium fraud charges

The California Labor Commission and the taxi company have been battling since the company was issued a Stop Order judgment in October by a Sonoma County Superior Court judge for continuing to refuse to provide workers compensation insurance as required by law.

“Hard working business owners across California get up every day and play by the rules, even when it isn’t always easy. This case sends a powerful message to businesses that break those rules by misclassifying their employees,” said Labor Commissioner Julie A. Su. “My office will not tolerate the misclassification of employees as a business model because it undercuts both workers’ rights and businesses who treat their employees fairly.”

Investigation began in 2014

In March 2014, the California Labor Commissioner’s Office began its investigation into A-C Transportation Services and found that it had failed to provide workers’ compensation insurance coverage as required by law from 2011 through 2014. The agency also found that the taxi company was misclassifying drivers as independent contractors. A citation for $522,300 was issued and appealed by A-C Transportation, which continued to claim that the drivers were independent contractors who leased taxi cabs from the businesses.

In January 2015, the Labor Commissioner affirmed the citation and determined that the taxicab drivers were employees and not independent contractors. A-C Transportation Services then filed a petition to review the administrative decision in Sonoma County Superior Court. On Sept. 16, the court found that there was substantial evidence to support the Labor Commissioner’s determination and denied the petition.

A-C Transportation continued to operate and refused to secure workers’ compensation insurance, however. In response, the Labor Commissioner requested the court to intervene and issue a Stop Order. On Oct. 19, a Sonoma County Superior Court Judge issued a Stop Order judgment. On December 7, both parties reached an agreement to resolve the case.


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