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SJC-11757

BERNARD SEBAGO & others1 vs. BOSTON CAB DISPATCH, INC.,

& others2 (and a consolidated case3).

Suffolk. January 8, 2015. - April 21, 2015.

Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, & Hines, 

JJ.

Taxicab. Independent Contractor Act. Massachusetts Wage Act.

Minimum Wage. Tips. Labor, Wages, Minimum wage, Overtime 

compensation.

Civil actions commenced in the Superior Court Department on 

March 6 and September 14, 2012.

After consolidation, the case was heard by Linda E. Giles, 

J., on motions for summary judgment, and the case was reported 

by her to the Appeals Court.

The Supreme Judicial Court granted an application for 

direct appellate review.

 

1 Pierre Duchemin and Ahmed Farah. The plaintiffs sued 

individually and on behalf of all others similarly situated.

2 USA Taxi Association, Inc.; Independent Taxi Owners 

Association; George Summers; and John Byda.

3 Ahmed Farah & another vs. Edward J. Tutunjian & another.
2

Shannon Liss-Riordan (Adelaide Pagano with her) for Bernard 

Sebago.

Andrew Good (Philip G. Cormier with him) for Edward J. 

Tutunjian.

Albert A. DeNapoli (Emily C. Shanahan with him) for USA 

Taxi Association, Inc.

Nathan L. Kaitz, for John Byda, was present but did not 

argue.

The following submitted briefs for amici curiae:

Norman M. Leon, of Illinois, & Matthew Iverson for 

International Franchise Association.

Nicole Horberg Decter & Don Siegel for Massachusetts AFLCIO.

Stevan Johnson, pro se.

Helen G. Litsas, Special Assistant Corporation Counsel, for 

city of Boston.

CORDY, J. In this case, we must determine whether licensed 

taxicab drivers in the city of Boston (city) may be classified 

properly as independent contractors, see G. L. c. 149, § 148B 

(independent contractor statute), in accordance with Boston 

Police Department Rule 403, Hackney Carriage Rules and Flat Rate 

Handbook (2008) (Rule 403). Rule 403 is a comprehensive set of 

regulations for the Boston taxicab industry, promulgated by the 

city's police commissioner (commissioner) pursuant to an express 

delegation of authority by the Legislature. St. 1930, c. 392, 

as amended by St. 1931, c. 408, § 7, and St. 1934, c. 280.

The plaintiffs in these consolidated cases, Bernard Sebago, 

Pierre Duchemin, Ahmed Farah, and Yves Bien-Aime, are licensed

taxicab drivers in the city. They contend that they were

employees of the defendants but were misclassified as 

independent contractors, thereby depriving them of minimum 
3

wages, overtime pay, tips, and the protections afforded by the 

Wage Act, G. L. c. 149, § 148. The defendants include taxicab 

owners, radio associations, and a taxicab garage. They argue 

that their relationships with the plaintiffs must be considered 

in the context of Rule 403, which explicitly permits drivers to 

operate as independent contractors. The plaintiffs reply that a 

municipal regulation cannot override the State's independent 

contractor statute.

We read Rule 403 and the independent contractor statute in 

harmony and conclude that the plaintiffs were not employees of

the defendants. Rule 403 neither precludes taxicab owners from 

entering into employer-employee relationships with drivers nor 

recasts drivers as independent contractors where they would

otherwise be considered employees. Rather, Rule 403 creates a 

regulatory regime over an industry in which taxicab owners, 

radio associations, and drivers may operate as separate 

businesses. Given the Legislature's broad grant of authority to 

the commissioner, we cannot say that Rule 403 is contrary to the 

policies undergirding the independent contractor statute.4

1. Background. In 1930, the Legislature granted the 

commissioner the exclusive authority to regulate the city's

taxicab industry. St. 1930, c. 392, § 1 ("police commissioner 

 

4 We acknowledge the amicus briefs submitted by the city of 

Boston (city), the International Franchise Association, the 

Massachusetts AFL-CIO, and Stevan Johnson.
4

of the city of Boston shall have exclusive authority to make 

rules and orders for the regulation of hackney carriages and 

hackney stands"). In 2008, acting pursuant to that mandate, the 

commissioner promulgated Rule 403, creating a comprehensive 

system of rules and regulations governing the ownership,

leasing, licensing, rate setting, and operation of taxicabs in 

the city. Rule 403, § 1(II). We summarize how the taxicab 

industry is designed to operate under Rule 403, reserving

certain details for the issues raised on appeal.

Rule 403 defines what it means to be a Boston taxicab. In 

order to qualify, a vehicle must, among other things, be 

"outfitted with an approved Protective Partition dividing the 

driver's and passenger's seats"; be "outfitted with an approved 

taximeter"; be "enrolled in a Radio Association and painted with 

the approved Radio Association colors and markings"; "display 

the current fare rate cards on the inside of the vehicle, in 

clear view of the passengers"; display "lease/shift rate 

stickers . . . in clear view of the Driver"; "be equipped with 

an electronic credit card processing capability"; and "be 

equipped with two-way communication linked to an approved 

dispatch service or radio association." Rule 403, §§ 3(III)(C), 

7(I)(a).

In order for a qualifying taxicab to be put into service, 

the owner must obtain a license, called a "medallion," for each 
5

such taxicab. Rule 403, § 3(III)(c)(ix). Rule 403 sets forth a 

myriad of requirements that must be met in order to qualify for 

a medallion, including being deemed "suitable" individuals by 

the city's inspector of carriages, obtaining adequate garage 

facilities within the city, and maintaining membership in an 

approved "dispatch service or radio association, which provides 

twenty-four (24) hour two-way communication solely, and 

exclusively, for Boston [taxicabs]." Rule 403, § 4(II)(a), (l), 

(q).

The radio associations, in turn, are required to provide 

certain enumerated dispatch services to their members and may

accept payment for those services only from medallion owners.

Rule 403 imposes strict operational standards on the radio 

associations, ranging from record-keeping and financial 

reporting requirements to city approval of the association's 

colors and designs that are painted on their members' taxicabs. 

A radio association's failure to comply with Rule 403 is cause 

for its immediate removal from the commissioner's list of 

approved dispatchers, in which case, medallion owners have 

thirty days to enroll in a different radio association. Rule 

403, § 7.

Drivers are likewise subject to a distinct set of 

requirements under Rule 403, including training supervised by 

the city's inspector of carriages, obtaining taxicab driver 
6

licenses, and complying with numerous operational rules ranging 

from personal appearance to treatment of passengers. The 

procedures set forth in Rule 403 for picking up passengers at 

public taxi stands are highly specific, instructing drivers, 

inter alia, how to line up ("Take proper position in rear of the 

Hackney Carriage line"); what activities they may engage in 

while waiting in line ("Driver may perform small cleaning tasks

while on a public stand"); and how they may solicit passengers 

("from inside the vehicle by motion of the hand"). Rule 403,

§ 5(II)(u). The fares that they collect from passengers are 

determined by meter and flat rates set by the commissioner and 

specified in Rule 403. See Rule 403, § 10. In sum, businesses 

operating under the regime of Rule 403 may be described aptly as 

members of a highly regulated industry.

Rule 403 contemplates four business models under which a 

taxicab may be put into service: (1) the "owner-operator"

model, whereby a medallion owner with a qualifying taxicab

transports customers in exchange for fares and tips, Rule 403,

§ 3(I)(f); (2) the "leased" model, whereby a medallion owner 

leases a medallion to a taxicab owner, who then operates the 

medallioned taxicab, Rule 403, § 3(I)(g); (3) the "shifted"

model, whereby a medallion owner leases both a medallion and a 

taxicab to a driver to operate for a "shift," which is typically 

twelve hours in duration, Rule 403, § 4(I)(c); and (4) the 
7

"managed" model, whereby a medallion owner leases medallions to 

a "manager," who then subleases medallions and taxicabs to 

drivers for shifts. Rule 403, § 4(I)(a), (b). Rule 403 neither

expressly permits nor prohibits a model in which drivers operate 

as employees of medallion owners, radio associations, or taxicab 

garages.

The defendants in these cases include medallion owners,

radio associations, and a taxicab garage. Edward Tutunjian, 

John Byda, and George Summers each own corporations that, in 

turn, own and lease varying quantities of taxicabs and 

medallions (collectively, medallion owners).5 Tutunjian also 

owns Boston Cab Dispatch, Inc. (Boston Cab), which is one of the 

seven radio associations authorized by Rule 403. Summers and 

Byda each are members of the unincorporated Independent Taxi 

Owners Association (Independent Taxi), another of the radio

associations authorized by Rule 403. In addition, Summers owns 

USA Taxi Association, Inc. (USA Taxi), which operates a garage 

that services taxicabs and taxicab equipment.

The plaintiffs are licensed taxicab drivers who leased

taxicabs and medallions from the medallion owners at flat rates, 

 

5 Edward Tutunjian owns corporations that, in turn, own 372 

taxicabs and medallions. Another of Tutunjian's companies, EJT 

Management, Inc. (EJT), manages the leasing of Tutunjian's 

taxicabs and medallions. Byda owns corporations that, in turn, 

own and lease nine taxicabs and medallions. Summers owns 

corporations that, in turn, own and lease seventeen taxicabs and 

medallions.
8

which are set by the commissioner and specified in Rule 403. 

See Rule 403, § 6; Rule 403, Appendix III. The taxicabs they 

leased received dispatch services from either Boston Cab or 

Independent Taxi, which the plaintiffs were entitled, but not 

required, to use in the course of transporting customers for 

fares and tips. Where, as here, drivers lease their taxicabs 

and medallions, Rule 403 requires the parties to use the City of 

Boston Hackney Carriage Shift Lease Agreement 2010 Version

(2009), which sets forth the rights and obligations of the 

lessor and lessee, the duration of the lease, and the applicable 

flat lease rate. See Rule 403, § 6. The agreement also 

includes an optional "Independent Contractor" clause, which

states, inter alia, that the lessee is free from the control of 

the lessor and is not required to remit to the lessor any funds 

received in connection with the taxicab's operation.6 The lease 

 

6 The clause states in full:

"The Lessee specifically acknowledges that he is an 

independent contractor and the Lessor and Lessee are 

separate entities. This Agreement shall not be construed 

to form a partnership, limited partnership, general 

partnership, joint venture, principal agent or 

employee/employer relationship of any kind whatsoever. 

Neither the Lessor nor the Lessee shall have any power to 

obligate or bind the other. Lessee shall at all times be 

free from control or direction of the Lessor in the manner 

of operation of the Hackney Carriage. The Lessee shall not 

be required to accept any radio dispatch call other than 

those which it may be his volition to accept; and further, 

Lessee shall not be restricted in any manner as to the area 

in which he may operate said Hackney Carriage, nor shall he 
9

agreements between the plaintiffs and defendant medallion owners 

include this clause.

In 2012, the plaintiffs filed their complaints in the 

Superior Court, alleging that the defendants improperly 

classified them as independent contractors and, concomitantly, 

violated G. L. c. 149, § 148 (Wage Act); G. L. c. 151, §§ 1, 7 

(minimum wage law); G. L. c. 151, § 1A (overtime law); and G. L. 

c. 149, § 152A (tips law).

7 After the two actions were 

consolidated, the plaintiffs and some of the defendants filed 

cross motions for summary judgment, the focus of which were on 

count one of each of the complaints, misclassification as 

independent contractors. A Superior Court judge concluded that 

 

be required to remain in any specific place, as long as he 

adheres to the laws and ordinances of the municipality in 

which said vehicle may be operated and the rules and 

regulations governing Hackney Carriages. Lessee shall not 

be required to account to the Lessor in any manner for the 

fares or other amounts received by the Lessee in connection 

with the operation of said Hackney Carriage, except will 

turn over to the Lessor at the end of the rental period any 

records required to be kept by any laws, ordinances or 

regulations pertaining to the operation of the Hackney 

Carriage.

"The Lessor and Lessee specifically acknowledge that 

the inclusion of this optional clause in the Agreement does 

not indicate or imply any endorsement, approval or judgment 

as to the legal standing of the clause by the City of 

Boston, the Police Commissioner or the Hackney Unit."

City of Boston Hackney Carriage Shift Lease Agreement 2010 

Version (2009).

7 The city was also named as a defendant in one case, but 

was subsequently dismissed.
10

the plaintiffs provided a "service" to the defendants within the 

meaning of the independent contractor statute, but denied 

summary judgment after determining that genuine issues of 

material fact existed as to whether the provision of taxi 

services was within the usual course of the defendants'

businesses. The judge reported her decision to the Appeals 

Court, and we granted the parties' joint application for direct 

appellate review.

2. Discussion. a. Application of the independent 

contractor statute to the Boston taxicab industry. The 

independent contractor statute "establishes a standard to 

determine whether an individual performing services for another 

shall be deemed an employee or an independent contractor for 

purposes of our wage statutes." Somers v. Converged Access, 

Inc., 454 Mass. 582, 589 (2009). Under this standard, "'an 

individual performing any service' is presumed to be an 

employee." Depianti v. Jan-Pro Franchising Int'l, Inc., 465 

Mass. 607, 621 (2013), quoting G. L. c. 149, § 148B (a). The 

purported employer may rebut the presumption of employment by 

establishing the following three indicia of an independent 

contractor relationship:

"(1) the individual is free from control and direction 

in connection with the performance of the service, both 

under his contract for the performance of service and in 

fact; and
11

"(2) the service is performed outside the usual course 

of the business of the employer; and

"(3) the individual is customarily engaged in an 

independently established trade, occupation, profession or 

business of the same nature as that involved in the service 

performed."

G. L. c. 149, § 148B. The failure to satisfy any prong will 

result in the individual's classification as an employee. 

"Individuals who provide services to an employer as an employee 

(rather than as an independent contractor) fall within the 

protection of the wage act and G. L. c. 151, § 1A (overtime)." 

Somers, supra at 589.

The defendants argue that the independent contractor 

statute does not apply to the taxicab industry, because the

industry is separately regulated by the city as a public 

utility. We disagree. The enabling legislation for Rule 403 is 

not so broad as to give the commissioner the authority to 

override the independent contractor statute. See St. 1930, 

c. 392. See also Boston Gas Co. v. Somerville, 420 Mass. 702, 

703 (1995) ("Municipalities may not adopt by-laws or ordinances 

that are inconsistent with State laws"). Further, we have held 

that the independent contractor statute must be applied in a 

manner that is consistent with its underlying purpose, which is 

"to protect workers by classifying them as employees, and 

thereby grant them the benefits and rights of employment, where 

the circumstances indicate that they are, in fact, employees." 
12

Depianti, 465 Mass. at 620, quoting Taylor v. Eastern Connection 

Operating, Inc., 465 Mass. 191, 198 (2013).

It is instructive that the workers' compensation law 

expressly excludes taxicab drivers operating on flat-rate leases

from the definition of "employee," whereas the independent 

contractor statute is silent on the subject. See G. L. c. 152,

§ 1 (4). From this silence, we infer that the Legislature 

intended the criteria for identifying independent contractors to

be applied in the context of the taxicab industry. See

Depianti, 465 Mass. at 620, quoting Batchelder v. Allied Stores 

Corp., 393 Mass. 819, 822 (1985) ("remedial statutes such as the 

independent contractor statute are 'entitled to liberal 

construction'"). See also Roberts v. Enterprise Rent-A-Car Co. 

of Boston, Inc., 438 Mass. 187, 192-193 (2002) ("Had the 

Legislature intended to require that the notice appear in a 

particular location, it could have done so easily, as it has 

elsewhere in the General Laws . . . . The Legislature's silence 

on the subject cannot be ignored").

Nonetheless, the plaintiffs err in characterizing the

defendants as a singular employer exercising monolithic control 

over the taxicab industry. Disregard of the corporate form 

requires an analysis of the following factors:

"(1) common ownership; (2) pervasive control; (3) confused 

intermingling of business assets; (4) thin capitalization; 

(5) nonobservance of corporate formalities; (6) absence of 
13

corporate records; (7) no payment of dividends; (8) 

insolvency at the time of the litigated transaction; (9) 

siphoning away of corporation's funds by dominant 

shareholder; (10) nonfunctioning of officers and directors; 

(11) use of the corporation for transactions of the 

dominant shareholders; and (12) use of the corporation in 

promoting fraud."

Attorney Gen. v. M.C.K., Inc., 432 Mass. 546, 555 n.19 (2000).

Although there is common ownership among some of the defendants, 

"[t]he mere fact of common management and shareholders among 

related corporate entities has repeatedly been held not to 

establish, as a matter of law, a partnership, agency or 'joint 

venture' relationship that renders the corporations a 'single 

employer.'" Gurry v. Cumberland Farms, Inc., 406 Mass. 615, 624 

(1990).

The Depianti case is not to the contrary. In Depianti, we 

held that an employer could not perform an "end run" around the 

Wage Act "by virtue of an arrangement permitting it to distance 

itself from its employees." Depianti, 465 Mass. at 621, 624. 

Yet, the reported question in that case was premised on the 

assumption that the workers were employees, prompting us to 

caution that "the statute has no application where the parties 

have neither an independent contractor nor an employment 

relationship." Id. at 624 n.17. Depianti does not stand for 

the proposition that any connection between entities is 

sufficient to render them joint employers. Rather, Depianti

holds that if, for example, the plaintiffs in the present cases
14

were found to be employees of EJT Management, Inc. (the entity 

with which they contracted), the lack of a contract between the 

plaintiffs and Tutunjian would not shield Tutunjian from

potential misclassification liability. Id. at 624-625 & n.17.

Where, as here, the plaintiffs' allegations are limited to 

common ownership and control, there is no cause to analyze the 

defendants as a single employer. See Middlesex Retirement Sys., 

LLC v. Assessors of Billerica, 453 Mass. 495, 503 (2009); Gurry, 

406 Mass. at 624. The correct approach in these cases is to 

consider each defendant's relationship with the plaintiffs

separately, although, for ease of analysis, we group the 

defendants as owners and lessors of taxicabs and medallions 

(collectively, "medallion owners"); radio associations; and a 

taxicab garage.

8 We now turn to whether the plaintiffs provided 

services to the defendants in any of these groups and, if so, 

whether the recipients of those services misclassified the 

plaintiffs as independent contractors.

b. Provision of services. The threshold question is 

whether the plaintiffs provided services to the defendants. The 

motion judge concluded that the drivers provided a service 

 

8 It is important to keep in mind that if liability were to 

attach to one of the corporate defendants, the "president and 

treasurer of [the] corporation and any officer or agent having 

the management of the corporation or entity shall be liable for 

violations of [§ 148B]." G. L. c. 149, § 148B (d). However, 

this is distinct from the analysis whether a medallion owning 

entity and a radio association are alter egos of each other.
15

because, without the drivers' work, the owners' medallions and 

taxicabs would be worthless. The judge's reasoning, adopted by 

the plaintiffs on appeal, proves too much. "[O]ur respect for 

the Legislature's considered judgment dictates that we interpret 

the statute to be sensible, rejecting unreasonable 

interpretations unless the clear meaning of the language 

requires such an interpretation." DiFiore v. American Airlines, 

Inc., 454 Mass. 486, 490-491 (2009). Certainly, the parties'

characterization of their relationship as lessor-lessee, rather 

than employer-employee, is not controlling. See Commonwealth v. 

Weinfield's, Inc., 305 Mass. 108, 111 (1940) ("A consideration 

of the lease and the agreed facts leads to the conclusion that 

the relationship . . . was that of employer and employee"). 

However, companies spanning a vast array of industries commonly 

elect to lease, rather than purchase, equipment that is 

necessary to their business operations. Absent some controlling 

principles, all lessees would be deemed presumptive employees of 

their lessors.

In search of a controlling principle, the plaintiffs cite

several cases involving adult entertainment entities that 

purport to lease performance space to dancers.9 Those cases are 

 

9 See, e.g., Monteiro vs. PJD Entertainment of Worcester, 

Inc., Super. Ct., No. 10-1930 (Worcester County Nov. 23, 2011); 

Jenks vs. D. & B. Corp., Super. Ct., No. 09-1978 (Essex County 
16

not applicable here. This is not a case of defendants 

concocting an artificial leasing scheme to circumvent the wage 

laws. Contrast Weinfield's, Inc., 305 Mass. at 111 ("unusual 

method adopted in the lease is significant"). This is also not 

a case of owners creating a false dichotomy between the 

administrative and operational aspects of their business. 

Contrast Massachusetts Delivery Ass'n v. Coakley, 769 F.3d 11, 

14, 21 n.4 (1st Cir. 2014) ("[C]ouriers deliver packages for 

delivery companies. There can be no dispute that they act in 

the course of business for the delivery companies, even if one 

performs the deliveries and the other arranges the deliveries"). 

It is significant that the commissioner, rather than the 

defendants, created the leasing system at issue and, further, 

that the system was created in the context of a legislative 

mandate to regulate the taxicab industry. See Arbella Mut. Ins. 

Co. v. Commissioner of Ins., 456 Mass. 66, 77 (2010) ("we will 

not declare the regulations void unless no reasonable 

construction of them is in harmony with the legislative 

mandate"). We cannot say that the creation of a tightly 

controlled taxicab leasing system was an unreasonable method of 

regulating the taxicab industry. Cf. Hingham Healthcare Ltd. 

Partnership v. Division of Health Care Fin. & Policy, 439 Mass. 

 

Aug. 24, 2011); Chaves vs. King Arthur's Lounge, Super. Ct., No. 

07-2505 (Suffolk County July 30, 2009).
17

643, 651 n.9 (2003) ("defendant was following a legislative 

mandate to control reimbursement in an important, and highly 

regulated, industry. Nothing the defendant has done is in 

violation of the statutorily conferred power of G. L. c. 118G, 

and thus the 1998 and 2000 amendments may be deemed reasonable 

and necessary actions by the defendant"). Mere participation in 

that system is insufficient to render medallion owners the 

presumptive employers of the drivers who lease their taxicabs. 

See Parks Cab Co. v. Annunzio, 412 Ill. 549, 553 (1952) 

(defendant's business was "leasing of taxicab licenses, and in 

that business the drivers render no services for it").

It may be argued that there is a genuine issue of material 

fact as to whether the plaintiffs provided services to the 

medallion owners beyond the mere operation of their lessorlessee relationship. The summary judgment record is opaque, for 

example, regarding the extent to which medallion owners sold

advertising space on their taxicabs and, further, the extent to 

which the plaintiffs drove taxicabs depicting those 

advertisements. Although the plaintiffs were free to use leased 

taxicabs for purposes entirely unrelated to the transportation 

of passengers, their use of the taxicabs arguably could 

constitute a service to the owners insofar as it increased the 

value and facilitated the sale of advertising space. However,

as we explain below, even if the plaintiffs did, in fact,
18

provide the medallion owners with some form of service in this 

respect, the owners satisfy all three prongs of the independent 

contractor test.

With respect to the radio associations, it is noteworthy 

that they maintain voucher accounts with corporate clients. 

Vouchers from such clients are submitted to the taxicab drivers 

as payment for fares and tips. The voucher may then be redeemed 

through the radio association, which advances an amount equal to 

the fare and tip, minus a "processing" fee, which Rule 403 caps 

at eight per cent of the fare. Rule 403, § 7(I)(l). The 

revenue flowing to the radio association through the voucher 

program is directly dependent on the drivers' work of 

transporting passengers. Although the plaintiffs were not 

required to perform services for the radio associations, that is 

precisely what they did. Consequently, the independent 

contractor test must be applied to determine whether the 

plaintiffs are employees of the radio associations.

In contrast, the plaintiffs clearly do not provide services 

to taxicab garages. USA Taxi owns neither a taxicab nor a 

medallion. It does not lease taxicabs, maintain corporate 

voucher accounts, or belong to a radio dispatch association. 

Rather, it operates a garage that caters to the taxicab industry 

as a whole. USA Taxi's revenues derive largely from setting up 

and servicing taxicabs belonging not only to Summers, but other 
19

medallion owners as well. USA Taxi generates additional revenue 

from credit card companies for repairs made to credit card 

machines installed in taxicabs. The fact that Summers owns USA 

Taxi is not, in itself, of legal significance. See Middlesex 

Retirement Sys., LLC, 453 Mass. at 503. Irrespective of the 

services that USA Taxi allegedly provided to Summers, the record 

is clear that the plaintiffs did not provide services to USA 

Taxi. Summary judgment on count one should have been rendered

against the plaintiffs with respect to USA Taxi. Mass. R. Civ. 

P. 56 (c), as amended, 436 Mass. 1404 (2002).

Still to be addressed, however, is the application of the 

independent contractor test to the medallion owners and radio 

associations. We address each prong in turn.

c. Freedom from control and direction. The first prong

asks whether the drivers were "free from control and direction 

in connection with the performance of the service," i.e., the 

transportation of passengers in exchange for fares and tips. 

G. L. c. 149, § 148B (a) (1). The Attorney General has advised 

that this inquiry turns on whether the "worker's activities and 

duties [were] actually . . . carried out with minimal 

instruction. For example, an independent contractor completes 

the job using his or her own approach with little direction and 

dictates the hours that he or she will work on the job." 

Advisory 2008/1, Attorney General's fair labor and business 
20

division. "Insofar as the Attorney General's office is the 

department charged with enforcing the wage and hour laws, its 

interpretation of the protections provided thereunder is 

entitled to substantial deference, at least where it is not 

inconsistent with the plain language of the statutory 

provisions." Smith v. Winter Place LLC, 447 Mass. 363, 367-368 

(2006).

Drivers receive minimal direction from medallion owners or

radio associations. The drivers choose the shifts they work and 

are free to transport as many or as few passengers as they wish

during those shifts. Although Rule 403 allows a radio 

association to discontinue its services to a driver if the 

driver accepts dispatches and fails to complete them, the driver 

remains free to operate his or her business of picking up 

passengers in exchange for fares and tips. The driver is also 

free to lease from a different medallion owner, who, in turn, 

may provide the driver with access to a different radio 

association. Drivers may decline to accept dispatches 

altogether and, indeed, one of the plaintiffs in this case 

testified that he has never logged in to receive dispatches from

a radio association. Another plaintiff testified that he used 

leased taxicabs to attend classes and drive to volunteer jobs. 

See Commissioner of the Div. of Unemployment Assistance v. Town 

Taxi of Cape Cod, Inc., 68 Mass. App. Ct. 426, 430 (2007) 
21

(taxicab drivers free from control and direction where they had 

freedom of choosing which shifts to work, were not obligated to 

respond to dispatches, and were free to engage in other 

employment and perform personal business using taxicabs).

The driver's appearance, cellular telephone usage, ability 

to smoke, procedures for obtaining or refusing passengers,

standards for the treatment of passengers, meter rates, and 

geographical areas of operation are all governed by Rule 403.

Rule 403, §§ 5, 10. When a passenger leaves property behind in 

the taxicab, the driver is required to deliver it, not to the 

medallion owner or radio association, but to Boston police 

headquarters or the hackney carriage unit. Rule 403, 

§ 5(II)(2). Further, the leases they signed, while not 

dispositive, are additional evidence that the plaintiffs were

generally free from the control and direction of the medallion 

owners and radio associations. See City of Boston Hackney 

Carriage Shift Lease Agreement 2010 Version, supra. The 

defendants have carried their burden under the first prong.

d. Performance outside the usual course of the employer's 

business. The second prong represents the core of the parties'

dispute. This prong is satisfied if the drivers' services are 

"outside the usual course of the business of the employer." 

G. L. c. 149, § 148B (a) (2). We have recognized that a

purported employer's own definition of its business is 
22

indicative of the usual course of that business. See Athol 

Daily News v. Board of Review of the Div. of Employment &

Training, 439 Mass. 171, 179 (2003). Another factor is "whether 

the service the individual is performing is necessary to the 

business of the employing unit or merely incidental." Advisory 

2008/1, supra. The Attorney General has suggested that 

interpretations of the Illinois independent contractor statute 

are instructive of the distinction between necessary and 

incidental services. Id. We agree.10

In Parks Cab Co., 412 Ill. at 549, taxicab drivers paid 

flat fees to lease taxicab medallions. The court observed that 

the lessor was "not concerned with the operation of the cabs or 

the results of their operation . . . . Its business is the 

leasing of taxicab [medallions], and in that business the 

drivers render no services for it." Id. at 553. In contrast,

the drivers in O'Hare-Midway Limousine Serv., Inc. v. Baker, 232 

Ill. App. 3d 108, 111 (1992), leased limousines and transported 

customers for fares, but were required to remit a percentage of 

those fares to the lessors. The court recognized:

"[The] Parks cab drivers are readily distinguishable from 

the chauffeurs in the case at bar. While the cab drivers 

 

10 But see Athol Daily News v. Board of Review of the Div. 

of Employment & Training, 439 Mass. 171, 179 n.11 (2003) ("To 

the extent that language employed by the Illinois court suggests 

that a newspaper delivery route is a newspaper company's place 

of business for purposes of G. L. c. 151A, we respectfully 

disagree").
23

were free to pick up passengers wherever they chose, [the 

chauffeurs] picked up customers who had 'booked' limousine 

services with [the employer]. While the cab drivers paid a 

set weekly rate for their leases, [the chauffeurs] paid a 

percentage of their commissions to [the employer], thus 

establishing a financial interdependence, or a direct 

financial stake with the limousine company."

Id. In Carpetland U.S.A., Inc. v. Illinois Dep't of Employment 

Sec., 201 Ill. 2d 351, 386 (2002), the Supreme Court of Illinois 

cited O'Hare-Midway, supra at 113, as an exemplar of the 

distinction between incidental and necessary services.

The present case hews much closer to Parks Cab than to 

O'Hare-Midway, for the medallion owners' leasing business is not 

directly dependent on the success of the drivers' endeavors. 

The medallion owners are not concerned with the results of the 

plaintiffs' operations, as drivers are not required to remit a 

percentage of their revenues, which include both fares and 

tips.

11 Cf. Whitehouse v. Cities Serv. Oil Co., 315 Mass. 108, 

111-112 (1943) ("[The distributor] conducted its own business, 

selling to its own customers and receiving as its only 

 

11 Rule 403 permits medallion owners to recover from drivers 

the credit card transaction fee charged to them by credit card 

companies. As Rule 403 requires drivers to accept credit card 

payments, the processing fee is simply a cost of doing business. 

The fact that the fee is channeled through the medallion owners 

does not render the leasing business dependent on the success of 

the drivers' transportation business. It also bears noting that 

if "the owner chooses a source for the [credit card processing] 

equipment that charges more than [six per cent], said Medallion 

Owner (or Lessee in a Medallion-only lease) shall be responsible 

for any credit card processing fee charged that is greater than 

[six per cent] of the fare." Rule 403, § 4(II)(g).
24

compensation whatever profits accrued from the business. [The 

distributor] was paid nothing by the oil company. No part of 

the regular business of the oil company was entrusted to [the 

distributor]. . . . [T]he only relationship that it created was 

that of buyer and seller"). Although the plaintiffs may 

incidentally contribute to the owners' advertising revenues, the 

second prong "should not be construed to include all aspects of 

a business such that [the first and third] prongs . . . become 

unnecessary." Advisory 2008/1, supra.

Further, the fact that the radio associations advertise 

taxicab services has nothing to do with the leasing transactions 

between the drivers and medallion owners. The plaintiffs'

argument requires us to accept the premise that the owners and 

radio associations are one and the same. As indicated above, we 

reject that premise. Rule 403 creates separately defined 

businesses within the taxicab industry. Absent evidence that a 

medallion owner and radio association are alter egos, there is 

no cause to ignore the distinction drawn by the regulation. See 

Middlesex Retirement Sys., LLC, 453 Mass. at 503. See also

Hingham Healthcare Ltd. Partnership, 439 Mass. at 651 n.9. 

Consequently, if the medallion owners are to be deemed in the 

business of transporting customers for fares, the evidence 

supporting that conclusion would need to derive from their own 

representations and conduct.
25

The summary judgment record does not reflect that any of 

the medallion owners -- separate and apart from their 

involvement in the radio associations -- held themselves out as 

providing transportation services to passengers. Tutunjian 

describes his companies as leasing taxicabs, managing the 

leasing of taxicabs, providing taxicab dispatch services, and 

providing limousine services. Byda describes his companies as 

"taxicab" businesses. With respect to Summers, the only 

evidence relates to USA Taxi, which neither owns nor leases 

taxicabs or medallions. USA Taxi describes its business as 

"taxi service," which is precisely what the company does: it 

services taxicabs. The plaintiffs did not provide services in 

the ordinary course of the medallion owners' business, i.e., the 

leasing of taxicabs and medallions.

It is true that the radio associations advertise themselves 

as providing taxicab services and that they arrange for the 

transportation of passengers. Yet, these facts, helpful as they 

are to the plaintiffs' cause, see Athol Daily News, 439 Mass. at 

179, do not override the realities of the radio associations'

actual business operations or the regulatory framework in which 

those operations occur. In contrast to the Athol Daily News

case, the radio associations' business is not directly dependent 

on the drivers' services. Rather, Rule 403 requires medallion 

owners to purchase dispatch services regardless of how often 
26

those services are used in the transportation of passengers. 

Rule 403, § 4(II)(q). In other words, the radio associations'

raison d'etre, per Rule 403, is to provide dispatch services to 

medallion owners -- a service that is funded by medallion owners 

and only incidentally dependent on drivers.

The voucher program is likewise incidental to the ordinary 

course of the radio associations' business. The voucher program 

makes the dispatch services more attractive to their customers 

(medallion owners) because it creates a base of customers 

(passengers) for the medallion owners' customers (drivers). See

Rev. Rul. 71-572, 1971-2 C.B. 347 ("use of two-way radio 

communication, dispatchers, and advertising media . . . will 

enhance the lessee's profits by making more 'trips' available to 

him at the same time that it increases the lessor's ability to 

rent his taxicabs to the maximum extent, thereby increasing his 

profits"). The benefit inuring to the drivers, for which Rule 

403 permits a measure of compensation capped at eight per cent 

of the fare, is incidental to the ordinary course of the radio 

associations' business of selling dispatch services to medallion 

owners. Cf. Cannon v. Crowley, 318 Mass. 373, 376 (1945) ("One 

may also be engaged in a business that cannot be conducted 

unless he . . . can ship the finished product to the various 

markets. It is hard to imagine a business that is not dependent 

in some way upon transportation. In such instances, while 
27

transportation is a necessity, it does not thereby become a part 

of or a process in the business but it continues as ancillary 

and incidental thereto"). Accordingly, we conclude that the 

transportation of passengers for fares is not in the ordinary 

course of either the medallion owners' or radio associations'

businesses. The defendants have satisfied the second prong of 

the independent contractor test.

e. Engagement in an independently established business. 

The third prong requires that the drivers be "customarily 

engaged in an independently established trade, occupation, 

profession or business of the same nature as that involved in 

the service performed." G. L. c. 149, § 148B (a) (3). The 

critical inquiry under this prong is whether "the worker is 

capable of performing the service to anyone wishing to avail 

themselves of the services or, conversely, whether the nature of 

the business compels the worker to depend on a single employer 

for the continuation of the services." Athol Daily News, 439 

Mass. at 181.

As the defendants point out, Rule 403 creates a framework 

such that leasing taxicabs, dispatching taxicabs, and 

transporting passengers for fares each may function as a 

separate and distinct business. Drivers may lease taxicabs and 

medallions from whomever they wish. Each day of the week, they 

may lease from a different owner, each using a different radio 
28

association. Drivers earn as much as they are able and need not 

accept a single dispatch. See Town Taxi of Cape Cod, Inc., 68 

Mass. App. Ct. at 432 (taxicab drivers' ability to generate own 

businesses while using leased taxicab was evidence of 

"'entrepreneurial' spirit, exhibited by a typical independent 

contractor"). They are also free to advertise their services 

through personalized business cards. See Athol Daily News, 439 

Mass. at 182 ("The fact of the matter is that the carriers are 

free to advertise their delivery services . . . . The breadth of 

each carrier's delivery service is a function, not only of the 

original subscriber list given to the carrier by the [company], 

but of the individual initiative of the carrier. . . . This in 

itself is compelling evidence that a carrier is an entrepreneur

. . ."). The defendants have carried their burden under the 

third prong.

f. Coexistence of Rule 403 and the independent contractor 

statute. It is plain that our conclusion today rests in 

significant part on the regulatory framework created by Rule 

403. It is, of course, true that Rule 403 cannot trump the 

independent contractor statute. See Boston Gas Co., 420 Mass. 

at 703. Yet, Rule 403 does nothing to bar medallion owners from 

entering into employer-employee relationships with drivers, nor 

does it characterize workers as independent contractors where 

they would otherwise fit the definition of employees. Rather, 
29

it creates a system whereby taxicab drivers may operate as 

employees or as entrepreneurs with their own separately defined 

and separately regulated businesses.

In deciding whether this system conflicts with the 

independent contractor statute, we are guided by the 

Legislature's intent. We have recognized that 

"[m]isclassification not only hurts the individual employee; it 

also imposes significant financial burdens on the Federal 

government and the Commonwealth in lost tax and insurance 

revenues," and "gives an employer who misclassifies employees as 

independent contractors an unfair competitive advantage over 

employers who correctly classify their employees and bear the 

concomitant financial burden." Somers, 454 Mass. at 593. Many 

of these concerns, however, are simply not applicable to taxicab 

drivers operating under flat-rate leases because such drivers 

are not included in the definition "employees" for purposes of 

workers compensation premiums, unemployment insurance

contributions, and income tax withholding. See G. L. c. 152, 

§ 1 (4);12 Town Taxi of Cape Cod, Inc., 68 Mass. App. Ct. at 

 

12 Under the workers' compensation law, the term "employee" 

means:

"every person in the service of another under any contract 

of hire, express or implied, oral or written, excepting

. . . a person who operates a taxicab vehicle which is 

leased by such person from a taxicab company pursuant to an 

independent contract which specifically provides for a 
30

432;13 Rev. Rul. 71-572, 1971-2 C.B. 347; 830 Code Mass. Regs. 

§ 62B.2.1(3)(b) (2005).

14

 

rental fee or other payment to the owner of such taxicab 

vehicle which is in no way related to the taxicab fares 

collected by such person; and provided, further, that such 

person is not treated as an employee for Federal tax 

purposes."

G. L. c. 152, § 1 (4).

13 General Laws c. 151A, § 2, prescribes a three-part test 

for determining whether an individual is an "employee" for 

unemployment insurance purposes. The first and third parts of 

that test are identical to the test prescribed by the 

independent contractor statute, G. L. c. 149, § 148B. However, 

the second part diverges by allowing an entity to establish 

either that the service was performed "outside the usual course 

of [its] business" or "outside of all the places of business of 

the enterprise for which the service is performed." G. L. 

c. 151A, § 2 (b). In Commissioner of the Div. of Unemployment 

Assistance v. Town Taxi of Cape Cod, Inc., 68 Mass. App. Ct. 426 

(2007), the Appeals Court held that taxicab owners were not 

required to pay unemployment insurance premiums for drivers, 

where, inter alia, (1) "the drivers . . . were not obligated to 

respond to calls from [the owner] regarding a prospective 

customer"; (2) "the drivers did not transport customers on [the 

owner's] premises"; and (3) "[the owner] permitted them to 

engage in other employment or generate their own businesses 

while using the leased taxi." Id. at 430-432. See Athol Daily 

News, 439 Mass. at 179 n.11 ("assertion that the [newspaper's]

'places of business,' for purposes of the second part of the [c. 

151A] test, includes the geographic area tracked by all of the 

[newspaper's] delivery routes, is illogical").

14 In Rev. Rul. 71-572, the Internal Revenue Service (IRS) 

examined "whether taxicab owners or operators, carrying on their 

transportation services pursuant to 'lease' agreements with a 

taxicab company . . . [were] employees of the taxicab company 

for purposes of the Federal Insurance Contributions Act, the 

Federal Unemployment Tax Act, and the Collection of Income Tax." 

The IRS observed that a taxicab company did not exercise or have 

the right to exercise direction and control over the taxicab 

drivers in the performance of their services. It had "no right 

to obtain, for its own benefit, an accounting with respect to 
31

We also observe that if drivers operating in the shifted 

model were employees, then the shift fees (or lease payments) on 

which that model rests would clearly violate public policy as 

payments required for the right to work. See Awuah v. Coverall 

N. Am., Inc., 460 Mass. 484, 498 (2011). Such a result would be 

patently inconsistent with the Legislature's indorsement of the 

lease model, which is implicit in the exemption of taxicab 

lessees from the definition of employee in the workers'

compensation law. G. L. c. 152, § 1 (4). "[W]here two or more 

statutes relate to the same subject matter, they should be 

construed together so as to constitute a harmonious whole 

consistent with the legislative purpose." Board of Educ. v. 

Assessor of Worcester, 368 Mass. 511, 513-514 (1975).

Relying on subsection (b) of G. L. c. 149, § 148B, the 

independent contractor statute, the plaintiffs argue that the 

workers' compensation and other exemptions are not relevant to 

whether taxicab drivers are employees for purposes of the Wage 

 

the fares collected for operation of the taxicabs." Rather, it 

had "only the right to receive the specified regular payment." 

Accordingly, the IRS held that lessee taxicab drivers are not 

employees of the company for Federal employment tax purposes. 

Rev. Rul. 71-572, 1971-2 C.B. 347. "Taxpayers generally may 

rely upon Revenue Rulings published in the Bulletin in 

determining the tax treatment of their own transactions and need 

not request specific rulings applying the principles of a 

published Revenue Ruling to the facts of their particular 

cases." 26 C.F.R. § 601.601(d)(2)(v)(e) (2014). Massachusetts 

applies the Federal standard for the applicability employment 

tax withholding. 830 Code Mass. Regs. 62B.2.1(3)(b) (2005).
32

Act. Subsection (b) provides that "[t]he failure to withhold 

federal or state income taxes or to pay unemployment 

compensation contributions or workers' compensation premiums 

with respect to an individual's wages shall not be considered in 

making a determination under this section." The plaintiffs 

interpret this language to mean that the Legislature intended 

the scope of employment to be wider with respect to the Wage 

Act. We do not read subsection (b) so broadly.

"A fundamental tenet of statutory interpretation is that 

statutory language should be given effect consistent with its 

plain meaning and in light of the aim of the Legislature unless 

to do so would achieve an illogical result." Sullivan v. 

Brookline, 435 Mass. 353, 360 (2001). The word "failure" means 

the "neglect of an assigned, expected, or appropriate action." 

Webster's Third New International Dictionary 815 (1993). In 

other words, it implies the existence of an affirmative duty or 

obligation. Yet, with respect to taxicab drivers operating on 

flat rate leases, the laws exempt medallion owners from making 

unemployment insurance contributions, paying workers' 

compensation premiums, and withholding Federal and State income 

taxes. See notes 12, 13, and 14, supra. Where there is no such 

duty there is no failure.

The more harmonious reading of the statutory framework is 

that the Legislature intended to preserve the ability of taxicab 
33

drivers to operate as either employees or independent 

contractors. If, for example, a driver did not qualify for the 

exemption from the workers' compensation law, the "employer's 

belief that a worker should be an independent contractor has no 

relevance in determining whether there has been violation of the 

Law," vis-à-vis the failure to pay workers' compensation 

premiums. Advisory 2008/1, supra. Rule 403 does no violence to 

the Legislature's intent.

The plaintiffs speculate that our decision today will 

provide incentives for businesses in other industries to 

deconstruct their operations into component parts to avoid the 

strictures of the Wage Act. This concern is not warranted. Our 

cases are clear that employers may not circumvent the Wage Act 

or other laws affecting employee compensation by creating 

illusory distinctions in the services they provide. See 

Depianti, 465 Mass. at 623-624; Awuah, 460 Mass. at 498;

DiFiore, 454 Mass. at 496. Importantly, however, those are not 

the facts of this case.

The medallion owners and radio associations merely complied 

with a regulatory framework that separately defines different 

services as different businesses. In other words, the 

distinctions in services within the taxicab industry as a whole 

are not illusory, but quite real. Contrast Massachusetts 

Delivery Ass'n, 769 F.3d at 14, 21 n.4. None of the defendants 
34

was required to engage in the distinct business of transporting 

customers for fares and, indeed, they chose not to do so. We 

conclude that there is no conflict between Rule 403 and the 

independent contractor statute either facially or as applied in 

this case. See Arbella Mut. Ins. Co., 456 Mass. at 77. See

also Town Taxi Inc. v. Police Comm'r of Boston, 377 Mass. 576, 

585 (1979) ("question whether the taxi industry monopoly created 

by the applicable statutes is wise as a matter of economic and 

social policy is, of course, not subject to judicial review"). 

Because the owners and radio associations have, in complying 

with Rule 403, satisfied each prong of the independent 

contractor test, summary judgment should have been granted in 

favor of Tutunjian, Summers, Byda, EJT, Boston Cab, and 

Independent Taxi on count one of each of the complaints.

3. Conclusion. We vacate the order denying summary 

judgment to the defendants and remand the case to the Superior 

Court for entry of judgment in favor of the defendants on count 

one of each of the complaints, and for further proceedings 

consistent with this opinion.

So ordered.