Limo Companies: Independent Contractors vs. Employees, Part 2

Last week, we began discussing the article that Wolpert Insurance’s owner, Robert Mucci, has put together. The article focuses on the hot topic of independent contractors versus employees in the limousine and livery industry. We began by discussing the difference between the two in our blog last week. This week, we would like to zero in on these two types of distinct services: the dispatch service and the transport service.

First, the dispatch service. This service links the client to the car. Typically, a dispatch company will represent a group of unrelated limousine drivers, companies and individuals. For instance, one driver may choose to refuse a job but the dispatcher will simply move on to another driver. Dispatchers are much more concerned with the “where and when” while limo operators are concerned with the “how.” Because of this, the IRS says, “Because pure dispatch companies do not have the right to control the drivers, application of these guidelines will often show that the drivers associated with limousine companies are properly classified as independent contractors (by the dispatch companies.)” However, it is important to make sure your limousine company can be classified as a dispatch company. The IRS warns companies that many CANNOT be classified as dispatch.

On the other hand, there is the transport service, which delivers the client to the destination. These companies operate by buying their own vehicles, hiring drivers using employment contractors, giving detailed directions to employees, monitoring performance and making them accountable to the company. Due to the nature of the transport service, the IRS says, “…the drivers associated with transport companies are properly classified as employees.”

Seems simple, right? To be honest, it is not that simple. The IRS also states that, “limousine companies generally offer both dispatch and transport service and classification issues most frequently arise in these mixed or typical service.” In order words, there will always be a grey area and the differences may get confusing. To learn more about this, be sure to come back next week! We will be discussing this grey area much more in depth.

*

Limo Companies: Independent Contractors vs. Employees, Part 1

Wolpert Insurance owner, Robert Mucci, has put together a great article that discusses the independent contractors versus the employees in the livery business. Over the next few weeks, we will be discussing a few of his main points from the article.

As the limousine industry grows, many operators continue to staff up, adding additional operators to the team. However, there is one question at hand for many limousine business owners: should the new employees be classified as independent contractors or employees?

It pretty much comes down to economics when making such a decision. If you consider your hire an employee, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid. However, when an individual is classified as a contractor, you generally DO NOT have to withhold or pay any taxes on payments. It is these things that generally affect the definition of an employee, but be careful. Some federal and state statutes have failed to clearly define the term “employee.” This is where the confusion begins!

According to the IRS website, “Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be:

• An independent contractor

• An employee (common-law employee)

• A statutory employee

• A statutory nonemployee
In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.”

Because this subject has continued to be controversial, the IRS issued a specific employment-related guideline in March of 1997 which discussed the classification of workers in the limo industry (dispatch and transport). Be sure to come back next week to learn more about both of these services!

*

Tips to Train Your Chauffeurs

As the owner of a limousine service company, it is important that you learn how to manage your chauffeurs. Whether you will be the one managing or you hire a trainer to do the managing, it is critical to teach drivers how to conduct themselves on every ride with each client they serve. If there is not a strict set of rules or training in place, you may find that clients are unhappy with the unorganized service.

Here are a few tips that may come in handy:

• Outline and document your company’s chauffeur policies and procedures in a manual. All employees must read and sign it.

• Create a core process that chauffeurs must follow day in and day out. Consistency is the key.

• Make safety a priority, especially when training.

• The company’s training process should include a variety of methods, such as lecture, videos, role playing, driving tests, formal reviews, etc.

• Training should cover everything from driving skills, safety, route planning, cell phone usage, dress code, gratuities to even luggage loading… the list is endless.

• Keep communication open between you and your employees. Frequent check-ins, e-mails and company meetings are necessary.

• Stand by your rules. If a chauffeur has trouble following your rules, they must be let go and made an example of.

The bottom line: keep your chauffeurs trained and keep a close eye on their conduct. If a driver is not quite working out, do not be afraid to let them go. One bad chauffeur could end up costing the company a client, or worse, a lawsuit. If this is the case, we hope that you have the proper limo insurance policies in place to cover for you. For more information on our limo coverage, contact our agency today!

*

Partnering with Charter Companies: 10 Quick Tips!

As a limousine driver, you should always be looking for ways to build your brand, reputation and business. One way to do this: partnering with coach companies.

Limo.org has offered 10 tips for those who are interested in partnering with charter companies. Here is a quick summary of these tips from MTR Western’s Darren Berg and The Driver Provider’s Jason Kaplan.

1. Shop around in order to find a coach company that understands your business and the services you provide.

2. Educate and familiarize yourself with the motorcoach business.

3. Don’t restrict yourself to the older companies. Many times, the younger and newer companies are fresh and passionate!

4. Check safety records, DOT audits and ratings before choosing a motorcoach company.

5. Consider customer expectations, make a list and make sure the motorcoach company can match your service standards.

6. Prepare a toolbox of companies to tackle different types of jobs.

7. Review pricing and negotiate. You must consider the effects that the pricing will have on your profit.

8. Look at fleet size before making a decision. If something goes wrong, you want to make sure the carrier will be able to substitute it.

9. Encourage invested drivers who will take care of the same coach each day. This way, he or she will be familiar with it and be able to take care of any maintenance issues, answer questions, etc.

10. Be involved! If you want to ensure a smooth experience for your client, you should call your partner to check in.

If this option seems appealing to you, check out the entire article here.

If you do decide to make such a change, it is in your best interest to contact our agents at Wolpert Insurance. Any change, whether large or small, may affect your insurance policies. For any questions or concerns, call us at 1-877-4-LIVERY!