Owners of one of Sonoma County’s largest taxi companies have agreed to pay a $200,000 fine and cease operations as part of a settlement with the state for refusing to provide 30 drivers with workers’ compensation insurance and “misclassifying” them as independent contractors, California Labor Commissioner Julie Su announced Dec. 29.
Kevin and Jennifer Kroh, who run Santa Rosa-based A-C Transportation Services Inc. as well as Healdsburg Cab Co., previously announced they would close the business at the end of the year because of the cost of battling with regulators. The Krohs’ final payment is due in June 2021, according to the state. The initial citation was $522,300.
“My office will not tolerate the misclassification of employees as a business model because it undercuts both workers’ rights and businesses who treat their employees fairly,” Su said in a prepared statement.
Su’s office launched its investigation into the company in 2014. The citation states that the Krohs did not provide workers’ compensation insurance from 2011 to 2015.
The Krohs met with drivers and employees on Dec. 8 to tell them the company would close by year-end, as funds have dried up for a legal battle with state labor regulators over whether drivers are employees.
“They say they are protecting workers, but they are putting them out of business,” said Kevin Kroh, president.
The company had been facing the citation from a July court judgment plus mounting legal bills in a three-year battle against the Department of Industrial Relations Division of Workers’ Compensation. At issue is whether the company’s drivers are independent contractors or employees, the latter of which need to be covered by workers’ compensation insurance. A-C Taxi says its drivers aren’t employees because they lease the vehicles and aren’t directed to work. The state insists the drivers are because they get fares through dispatch, which the company says is part of the lease package.
The matter went to a hearing a year ago, at which a number of drivers testified that they were contractors. Then the case went to Sonoma County Superior Court.
Also at stake from the A-C Taxi shutdown are dozens of rides a day the company provides under contract with local hospitals, shelters, nursing homes and charities, according to Kevin Kroh, who has owned the business for 20 years with his wife, Jennifer.
Such voucher fares make up 65 percent–70 percent of the company’s business, or 15–18 rides for a driver with 25 in a day, Kevin Kroh said. Under these voucher contracts, negotiated over the years with each organization and agency, the driver is paid for doing the work, then the company bills the organization.
One driver at the Thursday meeting, Jim, said one such voucher included a $550 fare to return a patient to Eureka after a $15,000 emergency helicopter trip to Santa Rosa.
“My hope is we can find a nonprofit to take over A-C Taxi to serve these people,” Jim said. “It can’t be something that benefits the owners.”
The planned shutdown would affect about 20 at A-C Taxi.
“It would have been 30, but in the past three years, we have not been able to put money back into the company,” Kroh said. In that time, a half-dozen vehicles have been taken out of service because of wear and tear, but less than half were replaced because of the drain from the legal battle, he said.
This story originally appeared on PressDemocrat.com at www.pressdemocrat.com/news/6485945-181/santa-rosas-a-c-taxi-to.