How To Practice Better Wage Policies

Jim Luff
Posted on May 26, 2016

Los Angeles employment law attorney Joe Lordan explains some of the common misunderstandings and mistakes that entrap limousine operations into violations or lawsuits during a seminar at the 2016 International LCT Show. (LCT photo)

Los Angeles employment law attorney Joe Lordan explains some of the common misunderstandings and mistakes that entrap limousine operations into violations or lawsuits during a seminar at the 2016 International LCT Show. (LCT photo)

LAS VEGAS, Nev. — Our industry operations frequently lead owners to ignore or skirt laws designed to protect employees. A Wage and Hour session, presented by Joe Lordan, an employment law attorney with Lewis, Brisbois, Bigaard and Smith Law Office based in San Francisco, provided a starting point on how to better comply with labor laws and thereby avoid expensive lawsuits and/or punitive actions.

This one hour session could easily be a full day course due to the volume of information and many rules employers could easily find themselves violating without even knowing it.

It should be noted that Lordan only accepts cases from the employer side, representing those who have found themselves in civil or labor court because of a claim filed against them by an employee(s). Lordan warned operators a single complaint by a single employee could trigger a cascade of consequences over several years. Those could include extensive examinations of payroll and employment records for individual employees, and more ominously, a verdict against the employer that could bankrupt a company based on fines and even calculations of interest assessed for incorrect pay amounts.

Employment law issues cover recordkeeping, time keeping, rest breaks, equipment damage, theft, sexual harassment, hostile work environments, discrimination, and misclassification of workers. These topics break down to more specific matters such as overtime pay, travel time, tip management, and even dress codes and requirements. For purposes of this article, we will cover the most common errors committed by operators.

What Is FLSA?
Employees are protected by the federal Fair Labor Standards Act. There are also state employment laws which vary among states, but FLSA laws apply to all workers in the U.S. If your company generates sales of more than $500,000 a year and/or two or more people who work under your direction and control, you are an employer and all FLSA rules apply to you and your employees, Lordan said. He noted you should always consult a labor attorney in your state if you need representation. While Lordan specializes in representing limousine companies in California and is considered an expert in FSLA regulations, states may interpret the laws or apply them differently to coincide with state law.

Interstate Commerce
This might come as a shock to many operators. If you are dropping passengers off at an airport who are traveling out of state or picking up passengers arriving at an airport from another state, your business is engaged in interstate commerce and regulated by federal laws beyond just the FSLA. In fact, simply taking an order by phone from an affiliate in another state and agreeing to do the job in your state is considered interstate commerce since a company in one state is engaging with a company in another state in an act of “commerce” or business.

Payroll Deductions
For some reason, our industry seems to run afoul of the law through illegal payroll deductions, although both the employer and the employee might agree to it. The agreement does not make it legal. This is especially true in the area of vehicle damage.

Let’s say the chauffeur backs your limousine into a pole at the gas station causing $1,200 worth of damage. Operators tend to ask chauffeurs to pay for the damage they caused. Chauffeurs, often fearful they may lose their jobs, may reluctantly agree to make payments through payroll deduction to cover the damage, but FLSA laws specifically prohibit a deduction that would benefit only the employer or be in the employer’s best interest rather than that of the employee. If you provide an employee with a cell phone, a digital tablet or any other piece of work equipment and he damages or loses the item, you may not deduct it from the paycheck.

One of the most common illegal deductions Lordan sees in the industry is a charge for damaged or scraped wheels. It commonly happens in the industry, but it is never acceptable to ask the employee to pay for the damage. The mere request is in fact illegal.

What About Gross Negligence?
Many employers who have suffered a financial loss caused by an employee may try to use a clause of “gross negligence” which basically says if an employee was willfully negligent and caused damage or loss of an employer’s belonging(s), the employee can be charged for it. Such an assertion is nearly impossible to win in court, Lordan said.

You might think, for example, that because your chauffeur hit the pole while backing the limousine and talking on a cell phone, that it qualifies as gross negligence. A judge or jury is unlikely to side with you on this, Lordan said. However, if the chauffeur lined the vehicle up with your building and rammed it in a fit of rage, this would be considered gross negligence but the matter would likely be settled in a criminal or civil action instead of a labor-related trial.

If They Work, They Get Paid
Another common problem that besets operators is failing to pay employees for tasks deemed trivial. Such tasks, no matter how small, qualify for employee pay.

A task as simple as calling in to check for work must be paid if you asked them to do so, Lordan said. The bottom line is anything you ask them to do is compensable or payable. In some cases, even things you don’t ask them to do must be paid. Some quick examples include: Pre-trip inspections, making or reviewing maps, prepping vehicles, standing by anywhere, time at the car wash, and even the time it takes them to drive from their house to the office or vice-versa if they are driving a company vehicle.

Even if an employee asks to take a company-owned vehicle home for convenience, the act of driving it as an employee makes it work-related. You might not agree. You might say, “We have always done it this way.” But all it takes is one person to file a complaint with the labor board and every chauffeur in your employment will be asked if he ever took a vehicle home and didn’t get paid. You will be ordered to pay them for every time they did it, plus penalties and interest.

About Standby Time
Speaking of taking vehicles home, are you paying standby time? Unless an employee is completely relieved of duty, they are considered on-the-clock. If a chauffeur takes a vehicle home and is expected to respond to calls for service on a moment’s notice, he must be paid for the time he is unable to go anywhere, consume alcohol or otherwise enjoy his private life activities. If the employee has the right to refuse assignments without penalty or disciplinary action, then he is considered completely relieved of duty and does not need to be paid.

Defined Workweek
The FLSA views the work week as beginning at 12:01 a.m. on Sunday morning and ending at 12 a.m. Saturday night. You can, however, define any workweek you like to coincide with your own payroll processing, but it must be posted on a wall where all employees can see the statement about when the pay period begins and ends and when the paycheck will be issued after the pay period or workweek ends. This is another troublesome area for small operators, who sometimes need to mimic the practices of larger companies with more employees to err on the side of compliance.

Related Topics: attorneys, chauffeur pay, driver pay, employee issues, employee vs independent contractor, employee wages, How To, ILCT 2016, industry education, industry events, lawsuits, Legal Issues, limo tradeshows, wage lawsuits

Jim Luff General Manager
Comments ( 1 )
  • anthony

     | about 4 years ago

    Great article, its a huge liability to play with wages and it can come back to haunt you in the future. I am waiting to see what happens with the "large operator" in long beach that had the history of playing with wages. We should hear what happens in the next 12 months from the district attorney. Your actions as an owner can ruin your finances for many years. Playing the wage game like your peers can be the biggest mistake in the industry

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