Court Opinion

ID: 2795290
Source: CourtListenerOpinion
Date Created: 2015-04-21 15:04:32.239343+00
Date Added: 2024-06-11T11:29:13.806299
License: Public Domain

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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 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.