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Post date: August 12 2014

A.G. Schneiderman & TLC Recover Over $1.6 Million In Restitution, Penalties From NYC Taxicab Company That Overcharged Drivers

Yellow Cab SLS Jet, One Of The Largest Medallion Leasing Agents In NYC, Unlawfully Charged Taxicab Drivers "Late Fees"

Schneiderman: Every Worker In New York Deserves An Honest Day's Pay For An Honest Day's Work, And Taxicab Drivers Are No Exception

NEW YORK – Attorney General Eric T. Schneiderman and Taxi and Limousine Commission (TLC) Commissioner Meera Joshi today announced that Yellow Cab SLS Jet Management Corp. (SLS Jet) has agreed to pay $1,387,500 in restitution to drivers who were illegally charged by the company, as well as $125,000 in penalties. Under a separate agreement with the TLC, SLS Jet will also pay $125,000 plus $25,000 toward cost of monitoring compliance, for a total of $1.6 million in restitution and fines. SLS Jet, located at 22-05 43rd Avenue in Long Island City is one of the fifteen largest medallion leasing agents in New York City, managing approximately 275 medallions.

Today’s announcement marks the second settlement resulting from a joint enforcement initiative of the Attorney General and the TLC to protect the rights of New York City's taxi drivers under the TLC’s “lease cap rules,” which limit the amount of money drivers may be charged for leasing taxicabs and medallions.

“Every worker in New York deserves an honest day's pay for an honest day's work, and taxicab drivers are no exception," said Attorney General Schneiderman. “With most cabbies already struggling to make ends meet, our agreement will put money back in their pockets and prevent this company from cheating drivers out of their hard-earned wages. Working with Commissioner Joshi and the TLC, we will continue to vigorously enforce lease cap rules and ensure that all taxi companies follow the law and respect drivers’ rights." 

“Taxi drivers are among the hardest working New Yorkers,” said TLC Commissioner and Chair Meera Joshi, “and the resolution of this case, including the recouping of over $1.39 million in restitution for victimized drivers and their families, sends a powerful message to anyone considering this kind of abuse that it will not be tolerated.  The Attorney General’s Office and the TLC are fully and jointly-committed to putting an end to this, and other forms of fraud and abuse where monies rightly belonging to drivers are illegally withheld, and drivers can feel confident that we will investigate every credible allegation we see.”

With the cost of a medallion averaging more than a million dollars, most taxicab drivers do not own the medallions associated with the taxis that they drive. Instead, drivers lease medallions, and often vehicles as well, from owners and leasing agents. New York taxicab drivers are generally not employees and are therefore usually not covered by minimum wage, overtime, or many other labor laws. 

The TLC lease cap rules, among the few workplace protections for drivers, limit the dollar amount drivers may be charged for leasing medallions and taxicabs, in order to ensure a baseline level of take-home earnings for drivers.  The rules also strictly limit add-on charges that can be imposed upon drivers and limit the purposes for which charges may be assessed. Overcharges by owners or agents chisel away at drivers’ limited income.

“The drivers who came forward are the heroes who forced cap enforcement practices in the industry,” said Bhairavi Desai, Executive Director of the New York Taxi Workers Alliance.  “They took on retaliation and harassment in the name of justice and today they have triumphed.  Given a driver who overcharges by $10 loses their license and faces prosecution for multiple offenses, the SLS Jet owners should be relieved for not facing criminal charges.  We thank the leadership of AG Schneiderman and the Labor Bureau and TLC Chair Joshi and her prosecutors for staying the course and sending the message that drivers’ economic rights will be protected.” 

"I commend Attorney General Schneiderman for his commitment to protecting New York City's workforce," said Vincent Alvarez, President of the New York City Central Labor Council, AFL-CIO. "The working men and women of the taxi industry are an important to our city's transportation infrastructure, and like all workers, they deserve to be treated with dignity and respect. This settlement will help to ensure that taxi workers are protected from unscrupulous employers, seeking to steal workers' hard-earned wages. The New York City Central Labor Council will continue to work with our elected officials to ensure that all workers are have the protections needed to keep the wages they earn, so that working families can continue to grow and thrive in our city.

The Attorney General’s investigation of SLS Jet revealed that the company violated the TLC’s lease cap rules in charging fees to drivers that SLS Jet described as “late fees.” Late fees were commonly understood by drivers and other companies in the industry as fees to be assessed for the late return of a taxi after a driver’s shift ended. In contrast, SLS Jet assessed late fees based on late pre-payment of the lease fee, but the company did not adequately inform drivers about the basis for such charges.  

Many drivers reported that SLS Jet prohibited them from pre-paying for shifts, thereby forcing them to incur SLS Jet's late fees. In addition, when certain drivers asked SLS Jet about late fees incurred, SLS Jet replied that the fees were charged because drivers leased hybrid taxicabs, a fee not permitted under TLC rules.

A review of documents by the Attorney General’s Office also revealed that SLS regularly caused numerous taxi drivers to incur late fees when it cashed out drivers’ credit card accounts – from which lease fees were deducted – before the deduction of the lease fee, thus leaving insufficient funds in credit card accounts to pre-pay lease fees. Finally, documents showed a significant spike in the incidence of late fees being assessed in January 2011, indicating a concerted effort by the company to recover more late fees beginning at that time. The charge of so-called “late fees” under such circumstances violated the TLC rules. 

In addition to the more than $1.6 million owed under the Attorney General’s and TLC’s agreements, SLS Jet must also take steps to ensure future compliance with the law. Specifically, SLS Jet must train managers and other employees, post a notice about lease cap rules, and appoint a compliance officer with responsibility for ensuring the company’s compliance with the agreement and with TLC Rules governing lease caps. SLS Jet will also make quarterly reports to the Attorney General’s Office. Should the company fail to comply with the law going forward, it will be required to retain an independent monitor to monitor and report on the company’s compliance. In addition, SLS Jet will have to notify the TLC when it imposes any type of new fee upon drivers. 

In September 2013, the Attorney General and TLC entered into an ongoing collaboration to enforce lease cap rules. Today’s announcement follows the Attorney General’s December 2013 settlement with four taxicab companies for overcharging drivers in violation of TLC lease cap rules. In resolution of that earlier investigation, the companies paid almost $750,000 to the Attorney General’s office for restitution to drivers and $500,000 to the TLC for penalties.

The case was handled by TLC Prosecuting Attorneys David Ross and Jason Gonzalez, who were deputized as Special Assistant Attorneys General; Assistant Attorney General Elizabeth Wagoner; Special Counsel Patricia Kakalec; and Labor Bureau Chief Terri Gerstein. The Executive Deputy Attorney General for Social Justice is Alvin Bragg.

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