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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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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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!

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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!

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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 508-459-4700!

Whether your new livery company is just taking off or business has reached a slow point, marketing is always a good tactic to jump-start business again. There is plenty of ways you can market and advertise your services on the internet these days; are you ready to get started?

Here are five ways your company can use online marketing techniques to its advantage:

#1: Social media: It’s time to jump on the Facebook, Twitter and even LinkedIn bandwagon. Tweet and share company news on these social sites and connect with the community.

#2: Blogging: Giving your clients an “inside look” at your company will not only build better relationships but may also boost your company’s page rank on the search engines. Make sure you keep content fresh, relevant and interesting!

#3: E-mail Campaigns: This is a great way to connect with your clients on a monthly or even bi-monthly basis. A good strategy would be to send coupons, promotions and other great deals to clients who sign up for them.

#4: Newsletters: Let customers know what is going on in terms of company news. This constant contact will keep customers coming to your site and keep your brand fresh in your consumers’ minds.

#5: SEO strategy: A search engine optimization strategy is a great way to boost traffic to your website and in turn, sales. Keep content on your site relevant, well written and keyword-rich.

Branding your company online is an excellent way for your livery business to beat even the worst recession. We hope you take these tips and put them to good use… you may see a spike in business sooner than later! Once your clientele begins to grow again, do not hesitate to contact our agency, too. We would be happy to go over your coverage and make sure you are 100% protected.

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Last week, we went over the first few pieces of advice to consider when hiring new chauffeurs. This week, we have five more tips to share! It is your duty to hire top drivers who will be dedicated and responsible. The better the employee, the fewer claims you may find your company facing.

According to limo.org, it is important to:

#1: Implement a background check to make sure candidates do not have any records worth knowing.

#2: Consider the candidates attitude, personality and overall appearance. You want drivers who are social, personable and enthusiastic. These are the types of drivers who will be favored and preferred! Does the candidate smile? Does the candidate look you in the eye? Do they carry themselves professionally? These are all things to look for and make a note of.

#3: Conduct a safety assurance assessment by running a drug test, criminal background check, road test, post-employment offer medical examination, etc.

#4: Implement a driver training program that includes everything from customer service to defensive driving.

#5: Understand that a bad hire may cost your company, from increased recruiting costs, stretched administrative resources to increases insurance claims costs due to poor driving skills and other bad habits. Finding the right chauffeurs for the job will make all the difference.

As always, remember that the more chauffeurs you hire for the job, the more coverage you may need, from workers compensation to group benefits. At Wolpert Insurance, we are here to provide your business with the most comprehensive and affordable livery insurance policies. Contact us for more information, today!

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Are you looking to hire chauffeurs this summer? While many businesses do not have to put much thought behind their hires, the livery industry is different. It is important to find top-drivers who are not only capable of such a large responsibility, but are also polite and personable. It may seem impossible, but we are here to share a few secrets to finding the best candidates. Just remember: the more employees you hire, the more likely it is that your limousine insurance will need to be updated!

Here are five pieces of advice to take into consideration from www.limo.org:

#1: The company employment manual should include a description of hiring policies and procedures.

#2: All candidates must fill out an employment application. Analyze how this is done: Is it messy? Does it seem rushed? Are their answers thorough and well thought out? These can all serve as clues as to whether or not this person is organized or serious about the position.

#3: Have you thoroughly read the candidate’s resume and cover letter? It is important to know your facts before going into the interview.

#4: Prepare yourself for the interview. You may think the candidate is the one who should be prepared… think again! It is important that you have a brief summary of the company ready to share, as well as an in-depth description of the job. You should also have a list of interview questions ready to go (Tell us about yourself; Do you have previous experience as a chauffeur; Why do you consider yourself a good candidate; Etc.)

#5: Consider having another staff member interview the candidate (senior chauffeur, senior dispatcher, etc.) If you are looking to find out how the candidate takes care of their own vehicle, have the staff member walk the candidate out to their car in the parking lot.

The more chauffeurs you continue to hire, the more coverage you may need. Be sure to contact our experts at Wolpert Insurance. We would be more than happy to discuss your limousine insurance needs, from employment liability insurance to group medical, health, life and disability.

Until then, be sure to come back next week for another set of hiring best practices!

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