Correction: An earlier version of this story incorrectly said that drivers were salaried employees before the company switched to a franchise model. They were previously paid an hourly wage.An earlier version of this article also incorrectly said that the company has increased the number of drivers in Baltimore by more than a third since 2010. In fact, SuperShuttle increased the number of drivers by about a third between 2006, when it had 64 drivers, and 2010, when it had 85 drivers. In 2011, the service had 83 drivers.The earlier version of this article also contained a description of one driver’s income that the company disputes. The story stated that SuperShuttle paid Okieriete Enajekpo $75,787.18 in 2009, but that after deducting expenses and the cost of paying a relief driver, “Enajekpo was left in the red.” The article should have included more complete information. The company says that in a 2009 income statement, Enajekpo reported $147,450.24 worth of business, including some tips. After subtracting fees owed to SuperShuttle, Enajekpo’s net pay from the company was $75,787.18. Enajekpo said that he paid for additonal expenses related to his franchise, including a relief driver, gas and car maintenance. His 2009 tax returns showed a net loss of $2,665. SuperShuttle says that it is not privy to drivers’ personal finances but that it believes average income for franchise drivers after all expenses and fees is $40,000 to $55,000. Enajekpo’s lawyer declined to comment further under the terms of a court settlement with SuperShuttle.
Okieriete Enajekpo needs money.
It’s not that the Nigerian-born Maryland resident is unemployed.
But as a driver for the airport van service, SuperShuttle, he must pay the company $900 a week or more before he takes home any money of his own.
And going into his fourth day one week in January, Enajekpo was still more than $100 short of settling his weekly debt.
“People back home [in Nigeria] think, ‘Oh, you’re in America so you must be doing well,’ ” he says. “They don’t understand.”
It wasn’t always like this.
In the past 13 years, SuperShuttle has transformed its drivers into franchisees — what the company calls independent business owners. In doing so, SuperShuttle has shifted, in its own words, “hard to manage variable costs from the company” to the drivers, making “gross profits more stable and predictable.”
“It was too expensive and, frankly, almost all of our businesses were losing money,” says Thomas LaVoy, chief financial officer of SuperShuttle.
Some drivers say the shift has allowed them greater flexibility and a chance to start their own business. But Enajekpo and hundreds of other drivers across the country say the changes have done more harm than good — and, in a series of lawsuits, they say the company doesn’t allow drivers independence and is cheating them out of wages and benefits they would be entitled to as employees.
“It’s really a big racket,” says Mack Green, a Minneapolis driver who is also suing SuperShuttle. “It’s a good company for someone in the company. But the way they have it operating, they could never lose, because the driver is responsible for everything.”
SuperShuttle disagrees. “We offer an opportunity to independent business people who want to be in business for themselves a solid foundation, a good company, association and the means with which to be successful,” says Judy Robertson, head of franchising at SuperShuttle. “How a franchisee operates a business really is dependent on a franchisee, their drive.”
This transformation of employees into franchisees and independent contractors, which has been going on for decades, has led to a legal problem known as employee misclassification. When a company classifies its workers as contractors or franchisees, the worker loses labor protections such as overtime pay and minimum wages, and the company is exempt from tax payments such as unemployment and workers’ compensation.
Yet the boundary between legal franchisee or contractor and employee isn’t entirely clear, which means that various state and federal regulators, and even the courts, may allow different standards for the same company.
That certainly has been true for SuperShuttle. On the federal level, the National Labor Relations Board is split: In Denver, regional officials found SuperShuttle drivers were employees and allowed to unionize. In Dallas and Baltimore, they haven’t been able to unionize and both cases are now on appeal.
On the state level, unemployment agencies in Maryland and California also found that SuperShuttle drivers were employees, but the company has appealed both rulings.
This lack of action is why drivers have turned to the federal courts in New York, California, Florida, Arizona, Minnesota and Maryland. But most cases have stalled. SuperShuttle has settled cases in Florida, Arizona and New York.
SuperShuttle declined to comment on the litigation, but in court filings it vigorously denies that it misclassifies workers.
It was still dark outside when Enajekpo, a 44-year-old father, emerged from his townhouse in a modern cul-de-sac development in Prince George’s County.
Dressed in slacks, a blue jacket and a shirt imprinted with the yellow SuperShuttle logo, Enajekpo begins his morning routine.
Maintenance inspection. Check. Vehicle cleanup. Check. Next up: find the day’s first job.
Sitting inside his still-frigid van, Enajekpo turns on the Nextel monitor to see what jobs are available. Already, 32 vans are lined up at the airport awaiting passengers. Enajekpo looks instead for a group heading from his neighborhood to the airport.
There’s one job at 7:25 a.m. for $64, just minutes from his house.
But after he accepts the job, he finds that it comes with a hitch: One passenger had a coupon. Drivers must honor all company discounts, and this one lowered Enajekpo’s take to $60.
Enajekpo doesn’t complain too much. Any money will help, especially this week when he already owes SuperShuttle $1,054.45. There’s a $197.59 fee to pay down his franchise purchase, $179.20 for his van lease, $144.31 to cover insurance and a weekly $500 system fee for using the SuperShuttle reservations and equipment. He also has $33.35 in fees that SuperShuttle charges him for customer discounts or additional booking fees from third-party Web sites.
On top of that, Enajekpo owes SuperShuttle $79 from last week. Plus, he’ll have to pay the company revenue sharing fees — 10 percent of fares for runs to the airport and 27.5 percent for runs from the airport, plus an airport fee.
That’s just one week. Enajekpo’s debt began the day he signed up for SuperShuttle in 2004.
A 10-year franchise costs drivers between $15,000 and $40,000, depending on location. At Baltimore-Washington International Marshall Airport, it runs $25,000.
Virtually no driver has the money to pay up front.
So SuperShuttle, owned by the European giant Veolia Transportation, offers a financing system, usually over a seven-year period. It’s this loan that keeps drivers indebted to the company. The interest rates are fixed at a relatively high rate — between 12 and 15 percent, depending on the market — which means drivers can end up paying the company as much as $60,000 by the time they’re done.
Drivers have other costs, too. Many lease a van from a SuperShuttle affiliate with interest up to 15 percent. And SuperShuttle requires them to get a new one about every five years.
They pay insurance and a weekly system fee, and make these payments whether or not they work. (They don’t get sick days or vacation days, but they can hire a relief driver.)
These fees from franchisees add up to big bucks for SuperShuttle. In Maryland alone, the company made about half its 2010 revenue ($4.9 million) from unit franchise sales, according to franchise disclosure documents.
SuperShuttle’s LaVoy says franchising has another benefit: lowering driver turnover from 185 percent to about 15 percent.
For some drivers, the arrangement works well. Pat Alden, 62, lives in Baltimore County and has been driving a SuperShuttle van since 2004.
“I’m here because I want to be self-employed,” she says. “I chose this because of the flexibility.”
As a single mother of three — two with special needs — Alden often has to help her now-grown children with errands. On one recent day, she was able to log in remotely to secure her spot in line at the airport and still make it to the mechanic to get her son’s car fixed.
“I wouldn’t have been able to do that if it was a short wait,” she says. “So, is that a pro or a con?”
Alden estimates that, after expenses, she takes home around $30,000 a year.
“Nobody promises you how much you’ll make when you’re self-employed,” she says. But, she adds: “I feel fortunate that I’m not looking for work. Many people with all sorts of good degrees are unemployed.”
Michael Adenugba, 53, a Nigerian immigrant, agrees. He began driving a SuperShuttle van eight years ago, but since he paid off his franchise he has a driver working it full time and is leasing a Cadillac taxi run by SuperShuttle that he now drives instead.
“This is not a job that can make you rich,” he says. “But just for you to survive.”
But drivers such as Enajekpo argue that’s not enough and say that a laundry list of rules don’t allow them real independence. For instance, they can’t advertise their own services. Drivers can’t use their van to work for any other company. And they can’t refuse a job when they’ve been waiting for hours at the airport and only get one passenger.
They must wear one of several uniforms. Among the items they can’t wear: a sweater and baseball cap without a SuperShuttle logo.
And they do get penalized. When former Baltimore driver Fred Tinsley was cited for wearing “non-uniform items” including a “white shirt without a tie, shirt tail out, brown sandal-type shoes,” he was given three days to comply or lose his franchise.
Some drivers also say it’s much harder these days to get enough work because SuperShuttle in Baltimore has increased the number of drivers by about a third between 2006, when it had 64 drivers, and 2010, when it had 85 drivers, even as revenue has hovered around $10 million. In 2011, the service had 83 drivers.
SuperShuttle attorneys told regulators that it doesn’t hire more drivers than it believes the market can handle.
But Enajekpo says that he has seen the amount of work he gets slowly erode. It’s 8:30 a.m. when he drops off the two passengers at the airport from his $64 bid. He’s No. 36 in line for the next job. So Enajekpo pulls his van into a nearby Shell station and waits. “It’s going to be a while,” he says, pointing to a row of SuperShuttle vans at the station.
The clock ticks slowly. At 4:10 p.m., he’s finally called to pick up passengers. He gets two and it’s dark again by the time he arrives home at 7:15 p.m. He looks down at the day’s tally: $150 earned in fares and $75 spent on gas.
This lack of work is part of why Enajekpo began asking management to limit the number of new franchises. But management kept selling new franchises.
In 2010, SuperShuttle landed a new contract with BWI, which increased airport fees from 15 to 17.5 percent of outbound fares — a difference drivers would have to make up.
Enajekpo knew that would be hard. The company says that in a 2009 income statement, Enajekpo reported $147,450.24 worth of business, including some tips. After subtracting fees owed to SuperShuttle, Enajekpo’s net pay from the company was $75,787.18. Enajekpo said that he paid for additional expenses related to his franchise, including a relief driver, gas and car maintenance. His 2009 tax returns showed a net loss of $2,665.
Feeling even more squeezed, drivers led by Enajekpo took their case to the NLRB, arguing that they were employees and should be able to unionize. They also wrote to regulators, but got nowhere. Then they filed a class action in federal court, where the case settled earlier this year.
John Singleton, a lawyer who has represented the drivers before state agencies and the NLRB says: “You’ve got a real problem here because you have different agencies of the state of Maryland all designed to protect certain groups of people failing to do their job.”
Enajekpo put it more bluntly in a letter to the U.S. Attorney General Eric Holder. It has given the company, he wrote, “carte blanche freedom to exploit minority workers trying to eke a living and fulfilling part of their American dream.”
The Center for Public Integrity is a nonpartisan, nonprofit investigative news center.