“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.