Are you looking to get your business going and get your limousine out on the road? Before you can do either, you must obtain a livery plate from the Massachusetts DMV.

As a livery operator in Massachusetts, you must acquire a special license plate (known as a livery plate.) A livery plate is designed for vehicles that are considered “limousines.” The term “limousine” typically means it is a luxury sedan, of either standard or extended length, with a seating capacity of no more than nine passengers, including the driver.

Once you have obtained your livery plate, you will want to get your vehicle out on the road. Before this can happen, you must obtain the right livery insurance. By having this coverage in place, you will be conveying proof of financial responsibility. The end result: a liability insurance certificate, an expiration date of your insurance policy and your vehicle identification number (VIN). Once you are all set, you will be good to go!

At Wolpert Insurance, we are experts in the livery department. Our agents are ready to work with you in order to secure your vehicle and get it out on the road as soon as possible. For more information, give us a call at 508-459-4700. We would be more than happy to provide your livery business with a free quote!

Welcome back to the fifth and final installment in our Independent Contractor vs. Employees series. Last week (will link to blog last week once it is posted), we discussed the common law factor test that the IRS established to distinguish an employee from a contractor. While this test “worked” for a while, it wasn’t until 2004 that a scarcely noticed amendment changed the Commonwealth of Massachusetts’ standard for determining whether an individual is an employee or independent contractor.

Let’s discuss this change…

The new law created a much stricter standard than the IRS’s factor test for determining contractor status. It also made it much more likely that individuals customarily considered independent contractors now being employees under Massachusetts’ law. This new law created a three-prong test to find out whether or not an independent contractor relationship exists. A limousine company would be required to pass all three prongs, being:

1. The individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and

2. The service is performed outside the usual course of the business of the employer; and

3. The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

Now, according to the Massachusetts Attorney General, “…a worker who performs the same type of work that is part of the normal service delivered by the employer MAY NOT be treated as an independent contractor.” This MUST be followed! If not, the penalties are harsh, from $25,000 or imprisonment up to one year for a first offense to $50,000 and imprisonment up to two years for a second offense.

Many limousine companies find that the best solution to avoiding penalties is to simply file their workers as employees. Why make it harder than it needs to be? Just remember, it is your responsibility to protect all of your employees, especially with limousine insurance and workers compensation. For more information on either, contact our agents at Wolpert Insurance! We are the experts and would be happy to answer your questions, assist you, and provide you with a free quote.

We hope you have enjoyed our 5-part series!

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Our discussion on independent contractors versus employees in the livery business continues! Over the past few weeks, we have gone over the definitions of both independent contractors and employees, discussed two types of livery services and even discussed the complicated “grey area” that comes about when both services overlap.

To follow up last week’s discussion of questions that the IRS may ask to work through the “grey area”, we would like to talk about a common law factor test in which the IRS developed in order to establish independent contractor status.

Within this test, two critical factors were identified:

1. Significant investment; and

2. Realization of profit or loss

If both critical factors are absent, the rest indicates that a driver is an EMPLOYEE and no further analysis is necessary. If both critical factors are present, the driver may be an employee or an independent contractor. If this is the case the analysis must proceed to a second level of “significant factors.”

The second level would be the IRS 20-factor, a right-to-control test that is used to assess an employers’ tax liability. In some states, a similar test is used to determine status under workers comp laws. Also, it is often used by courts to determine independent contractor status in other circumstances. Essentially, the economic realities test makes it harder to classify a worker as independent contractor because, in addition to considering the degree of control the employer exercises, it takes into account the degree in which the workers are economically dependent on the business.

However, in 2004, a scarcely noticed amendment changed the Commonwealth of Massachusetts’ standard for determining whether an individual is an employee or an independent contractor. Be sure to come back in the coming weeks to learn more about this. You won’t want to miss it!

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Welcome to Part 3 of our blog series: independent contractors vs. employees. Last week, we focused on the two types of distinct livery services; the dispatch service and the transport service. While both have clear differences, there is always going to be “grey area.” This week, let’s take a look at this “grey area” and what sort of questions it may lead to.

As stated last week, the IRS made a good point and said that “limousine companies generally offer both dispatch and transport service and classifications issue most frequently arise in these mixed or typical service.” This is where the opinions start to differ and both livery services begin to mesh together because typically the livery companies contend that the drivers run a complete and separate business. This translates into a variety of areas that overlap and become confusing. The IRS is then prompted to ask a number of questions. These questions include:

#1: Do drivers have a significant investment?

• The company may own the vehicles but the drivers will lease the cars.

• The company may own the central telephone/radio system but the drivers own their own car phones and radios.

#2: Do drivers have an opportunity for profit and loss?

• The company may provide gas for the cars, but the drivers stock the vehicles with drinks, magazines and other courtesy supplies.

• The company may require their drivers to be available in the evenings; however, the drivers can refuse jobs that are offered throughout the day.

#3: Are drivers subject to instruction?

• While the company may require the use of drivers’ logs and payment records, the drivers maintain their OWN business records.

#4: Do drivers make their services available to the public?

• The company may advertise their business in the Yellow Pages and online, but the drivers have their own business cards to hand out, as well.

#5: Do drivers render services personally?

• The company may forbid the use of outside drivers, but the drivers could substitute other drivers if they ALSO work for the company.

In some cases, livery operations may even have a contract in place that states that the parties agree that the driver is an independent contractor. One would think the debate it over, correct? Well, no. The IRS took it another step further and developed a common law factor test in order to establish independent contractor status. Be sure to come back next week to learn more about this test!

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