WATCH OUT: The Wage Police Are Coming

Posted on May 26, 2010 by LCT Staff - Also by this author - About the author

States are getting stricter about wage and hour rules for independent contractors. Auditors and enforcers are talking more amongst themselves.

EAST BRUNSWICK, N.J. — State and federal agencies that oversee compliance with wage and hour rules are not only getting tougher on enforcement but sharing information with each other, operators were told last week at a LIMOUSINE ASSOCIATIONS OF NEW JERSEY meeting.

“The states are being far more stringent and working more toward the interests of the driver,” said Barry Lefkowitz, executive director of LANJ. “They’re working together and sharing information. It’s getting more and more difficult in terms of the industry to be in compliance. We probably have more people out of compliance than we do in compliance.”

The May 19 LANJ meeting drew operators from New Jersey, New York, Pennsylvania, and throughout the Northeast who heard a wage and hour presentation by Christina Zarejko, chief auditor of the New Jersey Department of Labor, and Ted Easton, chief of enforcement for wage and hour compliance. Because New Jersey’s wage and hour laws resemble those of neighboring states, the presentation was relevant to chauffeured transportation operators throughout the region.

The officials made it clear that the NJDOL is sharing information with the U.S. Department of Labor and the Internal Revenue Service.

Zarejko explained to operators the test the agency uses to classify an employee as an independent contractor, which differs from the 20-point IRS test.

An operator “must clearly demonstrate you are working for more than one company, the vehicle is yours, and that you have control over your own time,” Lefkowitz said.

Auditors are targeting three key industries: Ground transportation, construction, and nail salons, Lefkowitz said. The officials admitted that a business is most likely to get audited after a red flag is raised. They also conceded that resources now are limited, with the DOL’s enforcement division down about 20 auditors because of budget cuts. “They’re not out there just auditing, but only if someone raises an issue,” Lefkowitz said.

Easton also explained how operators can lower their exposure to overtime pay. Although New Jersey exempts limousine companies from overtime wages, the federal government does not because of language recently sneaked into legislation that favors union policies, Lefkowitz said.

Operators can lower overtime wages by paying $7.25 minimum wage per hour for those hours a chauffeur is “on call” but not working, and the regular pay rate when the chauffeur is working a run. When calculating overtime, the minimum wage hours would lower the overall overtime rate, Lefkowitz said.

Lefkowitz reiterated the importance of New Jersey operators closely abiding by I/O and overtime pay rules regardless of the temporary shortage in state auditors. “You never know when you will get nailed.”

— Martin Romjue, LCT Magazine

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