US Department of Labor targeting Tow Companies

In December of 2015, the U.S. Department of Labor published their monthly newsletter DOL in Action. This newsletter included an article entitled A leg up for tow-truck drivers. The DOL announced plans for targeting Tow Operators in their ongoing efforts to decrease the number of Fair Labor Standards Act violations nationally. The DOL stated that tow-truck drivers often are subjected to misclassification as independent contractors, minimum wage violations occur due to wage deductions for damages to vehicles in tow, and overtime payment violations result when an employer pays a straight commission without regard to hours worked. The enforcement effort started in Texas and has now reached California.
An Employer’s Guardian client experienced an investigation first hand. The audit reviewed salaried employees, time tracking, wage statements, defined work week overtime computations, over a two year period. They collected financial data not just on this Company, but on others owned by our client. U.S. DOL investigators require employees be made available for confidential interviews and interviewed numerous employees in this case as well. Derrick Sheppard, DOL Wage and Hour Investigator, found zero violations over the two year period audited. These audit results were the result of well-designed systems and processes for managing compliance supported by a client that made compliance and employee well-being a daily priority.
The U.S. DOL industry sweep is resulting in hundreds of thousands of dollars in wages and penalties due from tow operators. Todd Larrabee, President of Employer’s Guardian, learned that enforcement sweep has expanded to California. A large AAA contractor in Southern California, which has been dealing with a DOL audit for ten months, called for assistance. There is some good news for targeted contractors; the U.S. DOL enforces Federal law, not substantially tougher California Law.
Mr. Larrabee brings up things to consider: “Too often tow operators take compliance for granted because that’s the way they’ve always done it. That can be a trap. Further, it may make sense to have a 3rd party take a look at your policies and supporting documentation.” As Pete Seeger says “Education is what you get when you read the fine print. Experience is what you get when you don’t.” In the world of employment law, “experience” can be an expensive lesson to learn, especially now that tow operators are targets.

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