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.


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