We frequently find ourselves explaining why turning payroll over to a third-party provider like BenefitMall is a wise decision. In so doing, we have to talk about compliance. Both federal and state laws are making payroll processing more complex as the years roll on. Sometimes the law is just not clear. Take the FLSA's rules on overtime as an example.
The FLSA requires employers pay all nonexempt employees one-and-a-half times their normal wage when working in excess of 40 hours in a given week. Exempt employees are not eligible for mandated overtime pay. Their employers can still pay them extra on a voluntary basis, but they are not required by law to do so.
Now, take the case of some New York limousine drivers who were not paid overtime based on the FLSA's taxicab exemption. The drivers claimed that they are not taxi drivers in the case recently settled by the U.S. Court of Appeals. The court ruled in favor of the employer.
Details of the Case
According to Bloomberg BNA, a group of limousine drivers brought suit against their employer for not paying overtime. The employer's position was that the company, despite offering limousine service, is still considered a taxi business under the legal definition.
Drivers claimed in their lawsuit that everything from the cars they drove to the work they performed classified them as airport limousine drivers rather than taxi drivers. As such, they believed they were entitled to overtime pay. The court ruled against them based on the following findings:
- The formal uniforms drivers are required to wear are irrelevant to the taxicab designation.
- The fact that the limousines do not resemble taxis is also irrelevant.
- The company advertising itself as a luxury car company does not make it an airport limousine service.
- A policy against picking up passengers off the street does not make the company a limousine service.
- Airport business making up 70% of the company's fares does not make the company an exclusive airport limousine service.
- Drivers do not follow specific routes or deliver clients to a limited number of set destinations. Variation of routes and destinations indicate the company is, in fact, a taxicab service.
- The company's services are not limited to airport contracts, meaning the general public can hire them to provide transportation. This further establishes them as a taxicab service.
The plaintiffs had legitimate arguments that almost won the day in lower courts. But ultimately, there was enough in the defendant's case to demonstrate that the company did qualify under the FLSA's taxicab exemption.
Sometimes It is Hard to Know
It is cases like these that demonstrate why so many companies trust their payroll and HR to third-party providers. Sometimes it's hard to know what federal and state regulations mean if you do not spend all your time studying them. Here at BenefitMall, we make it our business to know and fully understand the law.
It is part of our fiduciary responsibility to ensure clients are complying with the law in respect to payroll. We make it our business to know whether clients are paying their workers in accordance with FLSA regulations. We make it our business to ensure that taxes are being withheld and paid. We make it our business to ensure clients are keeping federally mandated records.
Employers are still ultimately responsible for maintaining regulatory compliance. But by trusting us with their payroll and benefits administration, our clients have an advocate in us. We work with them to guarantee compliance, even when certain parts of the regulatory framework may seem ambiguous.