Business

N.Y. taxi companies to pay $1.2 million for overcharging drivers

Four New York City taxi companies have agreed to pay $1.25 million in restitution and penalties for overcharging drivers to lease the yellow cabs that are icons of Manhattan's lifestyle, New York Atty. Gen. A.G. Schneiderman said Thursday.

Evgeny “Gene” Freidman and four taxicab companies owned in part by Freidman will return $746,000 to drivers who were charged more than is legally permissible to lease cabs and operating medallions, as well as $500,000 in fines. With control through his companies of more than 880 medallions, Freidman oversees one of the five largest fleets in New York City.

In September, Schneiderman agreed to help the city's Taxi and Limousine Commission enforce rules limiting the amount that taxi companies can charge drivers. The penalties announced Thursday were the first under that agreement.

“Taxicab drivers are not only an international symbol of New York City, they are also among the hardest-working New Yorkers,” Schneiderman said in a prepared statement. “Today’s agreement is the first major step in enforcing lease cap rules that protect workers and their already modest take-home pay. I’m confident that our new partnership with the TLC will continue to increase compliance in this important area."

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Because of the extremely high cost of purchasing a medallion required to operate a yellow cab in New York -- a pair of them recently sold for $2.5 million -- most taxi drivers lease medallions and vehicles from taxi companies. New York taxi drivers are generally not employees and are therefore usually not covered by minimum wage, overtime or many other labor laws.

The taxi authority limits the amount the companies can charge drivers to lease the medallions and cars.

In 2012, the TLC estimated that the average driver income after fuel, lease fees and other expenses was approximately $125 per day -- before drivers paid Social Security and other taxes. Taking into account the extensive weekly hours commonly spent driving, taxi drivers' pay often barely reaches minimum wage.

“It is unconscionable to cheat hardworking taxi drivers out of their earnings -- which aren't very much to begin with," said David Yassky, commissioner of the taxi commission. "Today's enforcement action should send a clear message to the taxi industry that violation of our driver-protection rules will not be tolerated.”

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