Transportation/Taxi Drivers: Employee vs. Independent Contractors

The Arizona Court of Appeals finds that taxicab driver was an independent contractor and not entitled to workers’ compensation benefits.

In Danial, the claimant leased a cab from AAA Cab Services to transport airport passengers from 2002 to 2016. Before leasing the cab, the claimant was required to complete a background check and undergo an eight-our defensive driving course. The claimant was allowed to work for other taxicab companies and his contract said he was an independent contractor and AAA would not provide workers’ compensation coverage to him. The claimant was responsible for paying his taxes and gasoline. He was allowed to terminate the lease at any time with 45 days notice. The claimant could work as few or as many hours as he wanted and set his own schedule. The claimant did not receive compensation from AAA, and instead, he was allowed to retain all passenger fares as compensation.

In 2016, the claimant was in a motor vehicle accident while transporting passengers and filed a claim for workers’ compensation benefits. The Administrative Law Judge (ALJ) ultimately found in favor of AAA that the claimant was an independent contractor because AAA “exercised very little direction or control over the details of the claimant’s work.”

The claimant appealed and the Court of Appeals held that the claimant was an independent contractor and not entitled to workers’ compensation benefits. Various factors that the Court considers are the duration of employment, the method of payment, who furnishes the equipment, the right to hire and fire, the extent to which the employer may exercise control over the details of the work, and whether the work was performed in the usual and regular course of the employer’s business.

In this case, the claimant did not receive direction from AAA, AAA earned no income from his passenger fares, the Airport provided general and minute-to minute directions on where the claimant could perform his work, and the Airport imposed all disciplinary action against AAA’s drivers. The claimant controlled his own hours and driving schedule and paid his own taxes. He did not have to report any of his income to AAA. Therefore, he was not an employee for purposes of Arizona’s workers’ compensation system.

Danial v. Indus. Comm’n of Ariz., 1 CA-IC 17-0068 (Jan. 15, 2019)

Would you like to know more? Contact Ilene Feldmeier at or 877-259-5693.


From the March 2019 Newsletter