Title: Sebago v. Boston Cab Dispatch, Inc.
Citation: N/A
Docket Number: SJC-11757
State: Massachusetts
Issuer: Massachusetts Supreme Court
Date: April 21, 2015

NOTICE:  All slip opinions and orders are subject to formal 
revision and are superseded by the advance sheets and bound 
volumes of the Official Reports.  If you find a typographical 
error or other formal error, please notify the Reporter of 
Decisions, Supreme Judicial Court, John Adams Courthouse, 1 
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us 
 
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 AFL-
CIO. 
 
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 lessor-
lessee 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.