EDD Audit: Trucking Companies
EDD Audit: Trucking Companies
The transportation industry landscape is grand and has changed immensely during this past decade. Companies, both private and public, involved in the logistics and movement of goods and people represent a sizeable portion of the country’s gross domestic product. Trucking companies in particular have become ostensible targets for Employment Development Department (EDD) audits, lawsuits, and unfortunately even criminal charges. The top reason for these actions is simple: employment misclassification issues. Because of the disastrous results that can occur to you and your company, the commencement of an EDD audit is a matter not to be taken lightly.
It is also important to note that the implications of an EDD investigation may not only end with this agency. If charges are serious enough, other taxation agencies such as the state and IRS may get involved; therefore, because of the intricacies of employment law as well as the far reaching consequences, the apparent decision you can make is to seek proper legal counsel to get you through this kind of audit. Always seek the soundest advice when facing intricate laws which could result in hefty exposures to your business and personal assets.
Factors That Cause Vulnerability
The EDD’s campaign against trucking companies mainly centers on the misclassification of workers. The specific areas of ambiguity are typically whether or not a worker is an independent contractor or an employee. To add to this mix, which is often the prime factor that leads to confusion, is something known as the industry standard. These general rules that are followed by businesses and individuals in the field, do not necessarily coincide with the law and can land you in hot water if you assume that to be the case.
Furthermore, there is a natural distrust exhibited towards trucking companies when it comes to the classification of their drivers and which makes the burden of proving that that certain workers are independent contractors fall upon the business. In order for the proper distinction to be made between employee and independent contractor there are a number of factors that require analysis. Among them, the biggest one is control – does management direct the manner and means that work is performed? In many ways, this question can have many gray areas. Other factors for proper classification include:
- Do you supply the tools, materials, and equipment that are used for work?
- Can the worker decline, leave, or quit a project at any time?
- Does the worker do a job without supervision or management direction?
- Does the worker establish his own schedule for performance of duties?
- How are other workers classified, especially ones with the same responsibilities?
The combination of answers to these above questions and many more factors will ultimate lead to the proper classifications of your employees. It can be a very difficult process getting through an EDD audit of this nature. The agency more often than not assumes you have violated labor laws and this method of tax evasion is particularly penalizing.
Because of the serious implications for both you and your trucking company that come with an EDD audit, the recommendation is to not go down this arduous path alone. Proper legal representation from the start will enhance your chances to efficiently get through it and with limited, if any, exposure.
Dallo Law Group has counseled many businesses in this regard. Our attorneys know the steps that you can expect and can not only help you through the audit, but also provide you with the proper guidance and business model set-up to establish proper worker classification. Violation penalties can add up rather quickly, you never want to be alone and at the mercy of the EDD.
Our skilled attorneys can offer their help from the time you receive your notice, through the audit, and during the audit resolution process. Contact us as soon as you can for a free consultation and to find out what to expect. Our goals will always coincide with yours: to assist you in avoiding, preparing, or defending your trucking business at an audit.